Solana (SOL) has become one of the biggest competitors to Ethereum, thanks to its speed and low transaction fees. It has climbed to the fourth position in terms of market value. The smart contract altcoin, which continues to compete with BNB Coin in the rankings, has seen impressive growth after recovering from an $8 low. Investors who were worried about its demise following the FTX collapse are now making purchases at triple-digit prices.
Why Is Solana (SOL) Rising?
So why is SOL Coin on the rise? One of the main reasons is the increase in TVL (Total Value Locked) on the network. According to data from DefiLlama, the total value locked in the Solana network rose to $1.9 billion on Monday, February 19. It hasn’t been years since it dropped to $200 million, and such a rapid recovery indicates that the price increase is not without foundation.
The network value, which increased by 244% in the last three months from $580 million in November 2023, also led to a 100% increase in the price during the same period. The rising TVL reflects investors’ interest in Solana’s DeFi ecosystem. Data from Solscan shows that transaction fees on Solana range from $0.0001 to $0.0003, which is great for DeFi protocols on the network.
While fees around $0.2 in Ethereum layer2 solutions do not hinder strong DeFi activity there, Solana appeals to a large portion of investors, especially those with lower capital. However, when compared to BNB, which it competes with in market value rankings, the SOL Coin price seems to be overvalued relative to TVL (total value locked in the network).
Airdrops
With one of the largest active developer groups, Solana boasts 2500 developers. This developer community has launched intriguing applications on the network and recently, we have seen significant airdrops from these protocols. Protocols that reward users in the ecosystem have enabled early adopters to earn thousands of dollars.
Of course, this activity accelerated the influx of external capital and was supportive for the SOL Coin price. The last major airdrop was conducted by Jupiter. In the second half of 2023, we saw that airdrops like Jito and Pyth laid the groundwork for a major rally.
Moreover, the BONK Coin story found significant buyers while SOL Coin was at its lows, and towards the end of last year, it made early investors in the ecosystem modestly wealthy while the ecosystem was at a low. The current price outlook suggests that breaking the $126 level could open the door to peaks above $142.
