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Solana (SOL) Surpasses XRP in Market Cap — What's Fueling This Uptick?

2023-12-21 16:46:10

The value of SOL surged to a peak of over $84 in 2023. On December 20, Solana experienced a rise of 13.8%, breaking the $82 mark for the first instance since May 2022.  


This recent SOL surge of 33.5% over the fortnight enabled SOL to edge past XRP in market valuation, elevating it to the position of the fourth-largest cryptocurrency, discounting stablecoins. Interestingly, experts are beginning to ponder if Ethereum's Ether can maintain its dominance, especially when the Solana platform promises swifter and more cost-effective transactions.

Trader Evanss6, in a post on X (previously known as Twitter), highlighted that Solana's focus on mobile accessibility is exactly what the crypto realm needs to engage users who aren't necessarily concerned about the decentralization depth or the nature of its foundational asset. Essentially, Solana's user-centric approach gives it an edge over rivals, especially during token and NFT launches, be it for projects that require extensive computational power or those aiming for economical transaction fees.

Various elements have propelled this surge in value, ranging from heightened network engagement to the immediate triumph of Solana's SPL token introductions. Yet, a more in-depth assessment is needed to ascertain if the present valuation stands on solid ground and if a push beyond the $100 mark is genuinely attainable.

On December 7, Solana made waves as prominent centralized exchanges added the freshly minted SPL token, JITO, the flagship token for the Jito liquid staking protocol, drawing inspiration from Ethereum's Lido. The Jito airdrop proved lucrative for participants, witnessing its market value soar past $300 million within mere hours of its debut trading session. Its impressive launch on platforms amplified interest in subsequent airdrops and token releases within the Solana ecosystem. 

The upward momentum in SOL's value is also influenced by the buzz around airdrops, leading to the swift depletion of Solana's Saga phone inventory and its subsequent trading at a markup in secondary marketplaces. Each Saga phone was endowed with 30 million BONK tokens, significantly overshadowing the device's $599 retail price. Intriguingly, several other initiatives eagerly joined the fray, even as Solana's creator had hinted at the potential phasing out of the phone initiative just a fortnight prior.

The Surge in SOL's Value Is Supported by Heightened Activity Within Its Decentralized Applications (DApps)

The uptick in SOL's value is not solely driven by memecoins but is underscored by the burgeoning activity within the Solana network's decentralized applications (DApps). Merely a few weeks back, as of November 29, the total value locked (TVL) on Solana was recorded at a modest $654 million, making up just 1.4% of the entire market. However, this metric has since surged to a substantial $1.28 billion, marking a notable 96% rise, as highlighted by DefiLlama's data.

Leading blockchains based on DApps activity in the past week. Source: DappRadar.

This notable increase in assets within Solana's ecosystem coincides with a surge in engagement across its DApps. Notably, Solana's growth in network activity surpassed that of many of its key rivals. Additionally, the count of distinct active addresses associated with Solana's DApps rose significantly to 875,250. In contrast, many other leading blockchains saw a downturn in user engagement over the same week.

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