- Solana (SOL) just underwent a major update to address its network congestion issues.
- Following that, its decentralized exchange (DEX) volume immediately rebounded to $1.28 billion, thanks to the popularity of meme coins under its ecosystem.
Solana has surged dramatically this year, climbing up from a $13 low to a $209 high. This allowed it to bump other altcoins on its way to the fifth spot of the cryptocurrency rankings by market cap as its total valuation now sits at $62.52 billion as it trades around $140 as of this writing at 1:30 AM UTC.
The appeal of the Solana blockchain rests on its quicker and cheaper transaction fees that dwarf in comparison to Ethereum’s (ETH) egregious costs, which can get up to $100 at the peak loads of its network. The new challenge in the former, however, becomes more prevalent as more users come in. The main problem lies in its network congestion, which has resulted in its shutdown on several instances like in February this year.
For this reason, the Solana mainnet rolled out the v1.17.31 update update yesterday to fix these issues. Right after that, it bounced back to $1.28 billion in 24-hour DEX volume as its popular meme coins continued to thrive.
Solana Now
Solana slumped during the weekend all the way to $123 due to Bitcoin (BTC) price dipping around 8% on Saturday as tensions in the Middle East escalated. Since these happened on a weekend at the close of the stock market, risk-averse investors only had cryptocurrencies trading 24/7 to turn to.
As a result, a lot of cautious crypto investors were quick to liquidate their crypto assets as a knee-jerk reaction. On the other hand, the massive selling pressure was immediately countered by buyers taking advantage of the dip in prices.
SOL’s Edge
For The Motley Fool, there’s a lot of potential for Solana moving forward because of its innate features. The main advantage it has lies in its proof-of-stake (PoS) consensus mechanism, which its rival Ethereum adopted in 2022. In addition to being less energy intensive than the proof-of-work (PoW) model, this means a more democratized way of approving transactions as token owners are the ones validating the blockchain through staking.
Another leverage that Solana possesses revolves around its varied use cases. Outside of its popular use for generating meme coins, analysts particularly see a lot of promise in the Solana Pay application released in 2022, which they dubbed as the network’s “killer app.”
Solana Pay allows users to transact using SOL and stablecoins. It also lets merchants issue receipts in non-fungible tokens (NFTs) for future perks like discounts and access to special events tied up to the seller.
Furthermore, there’s its Saga smartphone with Web3 compatibility and decentralized applications (dApps) support.
Lastly, there’s a higher investor enthusiasm for Solana this year mainly because of its gargantuan price recovery, revisiting the $200 range earlier.