Unlocking Solana (SOL) Potential: Insights into Growth and Trends (March 2024)

Delve into the latest Solana news and blockchain analytics revealing a landscape of opportunities. Discover how Solana’s competitive advantages, including low transaction fees and a vibrant DeFi landscape, position it as a leading contender in the blockchain space. However, amid slowing growth in active wallets and validator challenges, navigating the road ahead will require a keen understanding of market trends and platform dynamics. A must-read for blockchain enthusiasts seeking a deeper understanding of Solana’s competitive edge and future potential.

Below is presented the Latest analytics on Solana blockchain for February 2024.

Visit blockchainmetrics.online for more analytical materials.

Solana (SOL) in February 2024 ranks 3d in the blockchain ranking containing leading blockchain platforms based on the sum of key indicators. This position is held owing to significant TVL of ecosystem, a high level of daily active wallets and the lowest level of transaction fees among all leading blockchains.

(1) Over the past month, the number of daily active wallets on the Solana blockchain has increased again and reached an average of 417k per day. However, the growth slowed down significantly, almost stopping, if we focus on the values achieved in January 2024 and December 2023. Then, in percentage terms, the increase in the number of daily active wallets was 29.75% and 106.13%, respectively. Thus, over the past three months, the number of daily active wallets on the Solana blockchain has increased by 137%. This rapid growth occurred due to the extensive use of DeFi applications.

However, taking into account the fact that growth has practically stopped, it can be assumed that these changes were associated with the upcoming Bitcoin halving. Following are reasons.

A number of other leading altcoins have seen similar explosive growth in active wallets, such as Binance Smart Chain and Polygon.

Events like the upcoming Bitcoin halving influence overall market sentiment and investor behavior in the cryptocurrency space. It’s highly likely that some investors have shifted their focus and allocated their resources in anticipation of this challenging events.

The identified pattern suggests that investors were preparing by entering the market in advance, about three months in advance.

It’s highly likely, after the peak associated with Bitcoin halving, profit taking and an outflow of active users will begin. This conclusion can be drawn if we consider that these changes on all platforms, including the Solana blockchain, are a clear local anomaly, not associated with the explosive growth of interest in blockchain technology as such and the expansion of the areas of application of decentralized applications in everyday life.

(2) The volume of completed transactions in February 2024 on the Solana platform also increased. Moreover, by as much as 20%. This, as in the situation with active wallets, is a continuation of a trend that began back in 2023.

Over the past three months, the growth in transaction activity amounted to 71.65%.

Thus, in three months, the number of daily active wallets increased by 137%, but the volume of transactions carried out by these wallets increased by only 71.65%.

This probably suggests that investors placing their resources in anticipation of the upcoming Bitcoin halving are generally not yet strive to daily active activity, taking a wait-and-see approach.

We can make a prediction that in March–April, on the contrary, unusual transaction activity will begin, the growth of which will exceed the growth in the number of active wallets on the platform.

(3) With an increase in active wallets and transaction volume, Solana blockchain fees decreased by ~30% in the native SOL token and by 20% in fiat currency. If you look at the situation with commissions over the last two months, then everything is quite consistent with the trend of growing demand for platform services. The growth was an astronomical 470.49%. Of course, this growth is a direct consequence of increased activity on the part of end users. This affected both the transaction cost (for information, the average transaction cost increased by 314% during this period) and the volume of commissions collected by the platform.

(4) The average transaction fee in February on the Solana blockchain decreased by ~42% in the native SOL token and by 34% in fiat currency. Although, as noted above, in previous months the average transaction fee increased by 314%.

What’s surprising about this situation is something else. And this is probably the most important competitive advantage of Solana blockchain. With such an increase in demand for the token and with such an increase in the cost of one transaction, the platform can still offer the lowest level of transaction fees among all leading blockchains.

How do they do this? We know, that as more users and applications utilize the network, there is increased competition for block space, which leads to higher transaction costs. However, if the reduction in the cost of one transaction occurs despite this increased demand, it could indicate that Solana has successfully scaled its infrastructure to meet growing demand efficiently. This could include enhancements to its consensus protocol, network architecture, or transaction processing algorithms. Or Solana adjusted its fee structure to keep competitiveness.

What do you think, How did they achieve this spectacular result?

But it won’t be easy for platform developers. As noted above, in March… April, on the contrary, crazy transactional activity is expected will begin, which will further inflate the demand for space in blocks.

And we can expect further pressure on the value of a transaction fee on the Solana blockchain.

Whether the platform developers will be able to cope with these factors is a very interesting question.

(5) The number of Solana blockchain validators decreased by 6.54% in February, reaching a level of 1643 validators. And this is a clear trend towards an outflow of validators, because back in December 2023 there were more than 2000 of them.

This is a rather strange circumstance that makes us think about the prospects of the platform, since, as noted above, just during this same period, Solana blockchain commissions grew exponentially. And this means potential income for validators as well. And the numbers confirm this. In December-January, projected income per validator increased by 490.6% following the increase in fees volume.

And after such a rapid increase in commissions, the outflow of validators begins. Weird. On the Ethereum blockchain, on the contrary, validators line up to participate in the distribution of income from commissions for the crazy demand for Ethereum blockchain blocks. But the behavior here is completely opposite.

Most likely, we may not know something, but this is a bad sign that is worth paying close attention to.

(6) Regarding Solana price. The SOL token grew by 14.01% during the reporting month, reaching an average monthly average of $108.86. This metric is of course growing, reflecting the increased demand for services of platform itself. Over the past three months, the growth has been 83.39%. Almost twice!

Solana price prediction is hard to do, having all volatile market factors. But we keep a target as $145 as Resistance level for SOL token for within a month (it is not a financial advice and is given here for entertainment purpose only)

(7) The platform is currently dominated by decentralized finance (DeFi) protocols and applications for minting and trading NFTs.

The undisputed leader, both in February 2024 and in recent months, is the DeFi application Jupiter Exchange. The volume of active wallets in three months on this blockchain app increased by 273.85%. Which, by the way, quite correlates with the growth noted above of 137% of daily active wallets. And the growth trajectory (more precisely, the dynamics of declining growth) is absolutely the same.

Jupiter Exchange is expecting a difficult but interesting period with high transaction volumes. And probably the increase in the value of the Jupiter Exchange token (JUP) (https://jup.ag) by approximately 10% during this period (it is not a financial advice and is given here for entertainment purpose only)

Two more interesting projects showing outstanding metrics in February 2024 are Magic Eden (https://magiceden.io) and Sol Incinerator (https://sol-incinerator.com)

Magic Eden showed an increase in wallet activity by 115.05%

Sol Incinerator demonstrated a 175.86% increase in transaction activity

To sum everything up, from all these observations, several positive and negative signals can be identified for all those interested regarding the evolving track of the Solana blockchain:

Positive Signals:

1. Low Transaction Fees. Despite the increase in demand for the SOL token and transaction volume, Solana managed to reduce transaction fees. This is a positive signal for end users as it means they can transact on the platform with still low costs compared to other leading blockchains and to expect in the future Solana developers to influence on structure of transaction fees as well, reacting to market situation correspondingly.

2. Price Growth of SOL Token. The SOL token saw significant growth in February 2024 and previously, reflecting increased demand for blockchain. It can signal investor confidence in the platform’s long-term prospects, facilitating them to make investment decisions regarding deposit their funds in the platform future development. Which may attract more users and developers, leading to further improvements and innovations on the Solana blockchain.

3. Potential Transactional Activity Surge. This could lead to a significant increase of validators income, especially in background of previously recorded validators outflow and decline of their total number. If you are a validator or participant in Solana staking, you might benefit from this.

Negative Signals:

1. Decrease in Validators. Despite the exponential increase in transaction fees, which directly benefits validators, there was a decrease in the number of Solana blockchain validators. This trend raises concerns about hidden so far upcoming about Solana news and about the platform’s decentralization and security.

2. Slowed Growth in Daily Active Wallets. This could be a negative signal for end users as it suggests a potential plateau in user adoption and activity on the platform, which may limit the availability of new features, applications, and opportunities for engagement. Moreover, it could be a sign of approaching outflow of active users.

3. Potential Transactional Activity Surge. Transactional activity on the Solana platform may significantly increase in March-April, following the anticipated Bitcoin halving event. It could also lead to congestion and higher transaction costs, potentially impacting the user experience for end users.