Solana On-Chain Activity Soars: Is a Price Upswing Coming?

As Solana’s price declined in June, on-chain activity surged, indicating strong network fundamentals. This analysis delves into Solana’s on-chain data, explores reasons for the June price drop, and examines potential catalysts for a price rebound.

Key Takeaways

Price Fluctuations: SOL experienced significant volatility in June, peaking at $175 on June 5 and dropping to $124 on June 24, closing the month at $144.
ETF Applications: The filing of spot Solana ETF applications by VanEck on June 27 and 21Shares on June 28 spurred a 10% price jump, reflecting investor excitement.
Transaction Volume: Daily transactions on the Solana network increased by nearly 34%, from 32.7 million on June 1 to 43.8 million by June 30, indicating growing user adoption.
Non-Vote Transactions: The monthly average of non-vote transactions on Solana hit 915.15 million in June, the highest level in two years.
DEX Market Share: Solana captured nearly 25% of the DEX market, with a total trading volume of $38.4 billion in June.
Security Enhancements: The Solana Foundation improved network security by removing operators engaging in sandwich attacks from its delegation program.
NFT Sales: Solana ranked fourth in NFT sales volume with $68.5 million in June, a 26% decrease compared to May, with over 798k NFT transactions.

What is Solana?

Solana is an open-source blockchain platform founded in 2017, emphasizing scalability and speed. It processes over 710,000 transactions per second, enabling smart contracts and decentralized applications (dApps) for decentralized finance (DeFi) and nonfungible token (NFT) marketplaces. Its native cryptocurrency, SOL, is crucial for transactions and network security through staking.

Solana On-Chain Data Analysis and SOL Price Performance

In June 2024, SOL’s price experienced a downward correction. The price fell due to internal network issues, particularly maximum extractable value (MEV) concerns, and competition from Ethereum. Incidents involving sandwich attacks by some validators also contributed to the decline.

At the end of June, SOL closed at $144. This bullish trend was fueled by the filing of spot Solana ETF applications, sparking investor excitement. Analysts believe that spot Solana ETFs could significantly benefit SOL’s price.

On-chain data shows a substantial increase in daily transactions, rising from 32.7 million on June 1 to 43.8 million by June 30, a nearly 34% increase. The monthly average of non-vote transactions reached 915.15 million in June, the highest in two years.

While overall network activity increased, the number of new addresses joining the network slightly decreased, from 26.65 million in May to 25.4 million in June. Daily active users peaked at 2 million on June 4 and June 26, dropping to 1.6 million by June 30.

The total value locked (TVL) within the Solana ecosystem declined throughout June, dropping from $4.8 billion on May 1 to $3.4 billion by June 30, a 29% decrease. However, Solana’s TVL has grown 140% year-over-year, indicating increased user and developer engagement.

Solana Ecosystem Updates

Security Enhancements

The Solana Foundation proactively removed operators engaging in sandwich attacks, demonstrating a commitment to network security.

New Features

On June 25, the Solana Foundation launched Solana Actions and blockchain links (blinks), enabling seamless crypto transactions on various platforms.

Funding and Partnerships

Colosseum Accelerator: Raised $60 million to support Solana-based startups.
Loyalty Programs: Solana Labs introduced Bond, a blockchain-based customer loyalty platform.
Circle Partnership: Announced integration of programmable wallets into payment solutions, with support for NFTs and smart contract interactions.

Are Solana ETFs on the Horizon?

The prospect of a spot Solana ETF has garnered attention. VanEck and 21Shares filed applications with the SEC on June 27 and 28, reflecting strong demand for Solana-based investment products. However, approval may depend on changes in SEC leadership.

Solana Meme Coins

In June, meme coins had mixed performances. Dogwifhat (WIF) and Bonk (BONK) saw price increases following ETF application news, while MAGA (TRUMP) faced challenges due to rumors and market trends.

Solana DEXs

Solana’s decentralized exchange (DEX) ecosystem saw significant activity in June. Highlights include:

Sonic Funding: Secured $12 million for its gaming-focused Layer 2 network.
ZEX Token: Launched by Zeta Markets to incentivize user participation.
Squads Labs Funding: Raised $10 million and launched the retail wallet app Fuse.

Solana’s DEX market share reached 24%, with a total trading volume of $38.4 billion in June, reflecting its growing appeal and user base.

Solana NFTs and Gaming Updates

Despite a decrease in NFT sales volume, Solana saw promising signs of a rebound in July, driven by strong performances from collections like Mad Lads and Solana Monkey Business.

Notable NFT launches in June included Pixel Apes, Moon Rollers, Midnight Apes, and Cross Kitties.

Looking Ahead – Will Solana Rise in a Competitive Market?

June showcased Solana’s robust growth in user adoption despite price declines. ETF applications, growing transaction volumes, and ecosystem innovations suggest potential for future growth. Addressing internal issues, maintaining security, and leveraging institutional interest will be crucial for Solana to strengthen its market presence.

Continued innovation and strategic partnerships position Solana for significant growth, though challenges remain. By keeping users engaged and expanding its ecosystem, Solana could see a promising future in the competitive blockchain market.

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