Solana network services record record trading volume

The rise in the Bitcoin rate over the past month provoked a rise in the entire cryptocurrency market, and some of the largest crypto assets by capitalization were able to surpass the market leader in growth rates. In particular, the jump in the price of Bitcoin contributed to the growth of a group of altcoins led by Solana (SOL) – the sixth cryptocurrency by market capitalization and the main competitor of the second-ranked Ethereum (ETH), writes RBC Crypto.

SOL, the native token of the Solana blockchain, reached its highest price since May 2022 last week, rising to $68. Compared to the price of $9.97 on January 1, the price of SOL has increased by more than 500%. After the collapse of the FTX crypto exchange, the price of SOL bottomed out at around $9 by the end of 2022. The coin was considered one of the favorites of former FTX head Sam Bankman-Fried and was mentioned frequently during his trial. In the cryptocurrency community, the SOL token was called “Sam’s coin” – he and his companies invested heavily in projects and assets based on Solana technology and promoted its brand until the collapse of FTX last November.

According to report investment company Fineqia, the amount of assets in exchange traded products (ETP), representing an index of alternative cryptocurrencies, increased by 26% in October. At the same time, assets in SOL managed by exchange-traded funds grew by 172% last month – from $102 million at the end of September to $279 million. According to a CoinShares report, investors poured $12 million into funds tracking the price of Solana last week alone, which is a significant increase compared to inflows into funds associated with other altcoins such as Litecoin and XRP.

According to CoinShares analyst Max Shannon, who quotes Fortune, another possible reason for the increase in the price of SOL could be a significant increase in the volume of liquid staking in the Solana ecosystem, including through applications such as Jito, Marinade or MarginFi. Another factor could be an increase in open interest and funding rates, as well as general retail investor interest.

Record volumes

Decentralized exchanges (DEXs) on the Solana network are also seeing record levels of activity. According to the service DeFiLlama, trading volume on them in just a week increased by more than 50% and exceeded $3 billion. Turnover on the two largest DEXs of the Solana ecosystem – Orca and Raydium – increased by 70% from November 13 to 20. At the time of publication, the Solana blockchain ranks third in terms of weekly transaction volume, behind only Ethereum ($9.97 billion) and Arbitrum ($4.49 billion).

The reason for such a surge in activity specifically on decentralized services may be not only the increase in the price of SOL, but also the emergence of a new cohort of Solana users claiming to receive tokens from several projects that announced the distribution of coins to their active participants in the form of an airdrop. The sharp increase in trading volume in DEX on the Solana network coincided with the announcements of the distribution of tokens from the Pyth and Jupiter projects.

According to their developers, the tokens will primarily reward Solana supporters who used the blockchain during a “difficult period for the network,” when investments in the ecosystem, measured by the total value locked (TVL), dropped by 97% in dollar terms. compared to peak values.

It is clear that users are counting on retroactive airdrops, said comments to DL News, Anders Jorgensen, a representative of the credit protocol on the Solana network called MarginFi. He has no doubt that the recent increase in trading volume on the network is associated precisely with attempts to obtain the right to a share in future airdrops from Jupiter and from other projects running on the Solana blockchain.

During a presentation at the Solana Breakpoint conference in Amsterdam, which took place from October 30 to November 3, Jupiter developers announced that they would distribute tokens to users in four rounds, favoring those who “have been consistent during these difficult two years.”

Jupiter is a so-called liquidity aggregator that allows token exchanges across several supported decentralized trading services on the Solana blockchain, including Orca and Lifinity. The 1inch aggregator works on the same principle in the Ethereum network. According to CoinGecko, the hype around Jupiter is so great that Jupiter recently became one of the ten largest DEX services not only in the Solana ecosystem, but among all existing blockchain networks.

Such a surge in activity can often be triggered by the activity of the so-called sybils – those who, using many accounts and wallets, are engaged in artificially inflating actions in blockchain services in order to maximize the potential reward when distributing tokens. Sybils can use farms from thousands of accounts, and researchers have recorded evidence of their activity in each of the major airdrops, including Arbitrum.

While so-called airdrop farming is likely to be a part of the growth in volumes on the Solana network, it is not the only catalyst for the growth of trading volumes on the Solana network. “We’re also seeing a buzz around some older tokens,” says Jorgensen, pointing to popular tokens on the Solana network such as the BONK memcoin, which has seen its price increase 13-fold in the past month.

The founder of the lending protocol Solend, under the pseudonym Rooter, told DL News that, in his opinion, airdrops are only a “small driver” of the surge in activity, and the primary driving force is still the price movement of the Solana token.