Solana (SOL) is one of the few assets that has enjoyed a tremendous price jump recently, surging above $140. This march is driven by a combination of anger, frustration, and hope. Heightened network activity, stratospheric growth in decentralized finance (DeFi) protocols, and widespread speculation about an imminent spot Exchange Traded Fund (ETF) approval are all fueling the momentum. Notably, 5 days in network’s history have seen daily fees above $1 million, signaling increasing usefulness and adoption of the network.
DeFi Growth and Network Activity
Jito, Kamino, and Jupiter are just some of the key platforms powering Solana’s DeFi ecosystem to tremendous growth. Jito is a liquid staking solution that allows users to stake their SOL tokens while still maintaining their liquidity. This aspect dramatically increases participation on the network. Kamino Finance is a unique lending and liquidity platform that enriches the DeFi ecosystem. The platform provides users with novel ways to lend and borrow assets. Jupiter, a decentralized exchange (DEX) aggregator, finds the most efficient trading routes and provides deep liquidity to users across the entire Solana ecosystem.
Solana’s smart contracts now have $6.8 billion TVL. This incredible number has put Solana in the number two position all time in blockchain platform total value locked. Development activity, along with on-chain volumes, regularly place Solana third across the entire industry. This high user engagement and transaction activity, despite being still 21% behind Ethereum’s TVL of $5.4 billion, showcase its booming popularity. Investors are interested in the network due in part to its native staking reward rate of 7.7%. The inflation rate is at 5.1%, making it all the more tempting. The continued wave of new activity on the network indicates that Solana has found a bottom, paving the way for continued bullish movement.
Market Sentiment and Leveraged Positions
Recent price weakness aside, Solana’s recent market sentiment has been ultra-bullish as is indicated by the increased Leveraged Long Positions on leading crypto exchange Binance. This means that speculators are betting on additional price increases. The possible approval of a spot ETF is a major factor behind this optimism.
What the approval of a Solana spot ETF would do is cement the asset’s legitimacy. Such a move would help bring in institutional investors and increase overall demand. According to market analysts, spot ETF approval has the potential to catalyze parabolic price increases. This development would be another huge blow in strengthening Solana’s position in the space.
