TL;DR
What the hell is going on with Solana? In recent weeks, it has outperformed BTC and every major altcoin. Let’s have a look at the charts and look at some usage data and current narratives about the coin that was until recently belittled as ‘Sam coin’. Let’s look at some metrics, upgrades and narratives. Spoiler alert: after Firedancer goes live there are new use cases on the horizon.
The below graph compares SOL and BTC (orange line). As can be seen, Bitcoin has been no slouch in recent weeks. Between October 15 and November 1, BTC pumped 28%. And SOL… rocketed up an insane 75%! In this early stage of the bull market, it is rare that an alt outperforms BTC, let alone by a 3x.
Last summer, SOL also broke its downtrend versus ETH.
That’s great for SOL. But before we get over-excited, it’s good to zoom out. Let’s plot Solana (orange line) versus Cardano (candlestick bar) and Avalanche (blue line). Why? These are, like Solana, prominent alternative Layer-1s.
If we take the top of the bull market (mid-November 2021) as a reference point, the graphs aren’t all that different. These three alts are all down between 80% and 92% (but mind you: a relative price drop from 80% to 90% is another halving in price, so not just a marginal difference).
It’s just that Solana (orange line) has been even more volatile: it dropped further and has bounced back stronger.
Note how in June, all these alt Layer 1s crashed. It was after the SEC made regulatory complaints against Coinbase and Binance, claiming that they are a security and shouldn’t be listed on exchanges. However, ever since, SOL rallied whereas its competitors still linger around the June levels.
No Longer ‘Sam Coin’?
SOL has gotten a lot of flak in the past for being a VC token: a coin that was supposedly artificially pumped by ‘venture capital’. It was also called ‘Sam coin’, as Sam Bankman-Fried’s FTX and Alameda held a lot. Has this selling pressure been washed out?
Not quite. The SOL that is held by FTX and Alameda is subject to various unlock schedules. According to Messari, the average unlock date is in Q4 2025.
But still, the bad publicity, the ‘guilty by association’ phase is now behind us, and with Sam probably soon behind bars, Solana can move on.
Some Q3 2023 Solana Metrics
Messari published an insightful State of Solana Q3 2023 report. Some key findings:
- Solana transaction fees are still among the cheapest of all chains. The average transaction fee was $0.0002 in Q3 2023.
- At $8 billion, Solana is in second place behind Ethereum in terms of total staking market cap. Staked SOL continues to rise, and was up 2% in Q3, pretty much back to where it was pre-FTX collapse. (by the way, check out DeFi Dad’s article on SOL native staking. It talks about how to get 8% APY on the top liquid staking protocol on Solana, Marinade Finance.)
- The number of compressed NFTs (cNFTs) minted in Q3, jumped 300% quarter-on-quarter to 45 million. This type of NFT minting reduces storage costs.
- Solana’s DeFi Total Value Locked increased 32% compared to Q2, to $368 million. The growth was driven by DeFi and liquid staking protocols.
Ambitious Goals
Solana has always aimed to be a monolithic…
Erik started as a freelance writer around the time Satoshi was brewing on the whitepaper.
As a crypto investor, he is class of 2020. More of a holder than a trader, but never shy to experiment with new protocols.
