Solanaissance: The Reasons Behind Solana's Resurgence
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"The Ethereum Killer," "The Next Generation Blockchain," and "High-Speed Public Blockchain" are all titles that the market has bestowed upon the Solana network. The high performance and low transaction fees on Solana have to some extent addressed the congestion and high fees issues prevalent on the Ethereum network at the time.
Following the impact of the FTX collapse, Solana network underwent a lengthy rebuilding process and once again regained its former vitality.
1. The History of the Solana Network
Below is an outline of the developmental history of the Solana network, covering key milestones and events from its inception to its rise, downfall, and subsequent rebuilding.
March 2020: Solana mainnet launch.
July 2020: FTX announces the adoption of Solana as the underlying blockchain to build their decentralized exchange, Serum, leading to the first wave of market attention on the Solana network.
March 2021: Tether announces the issuance of stablecoins on Solana, a significant development for decentralized finance.
June 2021: Solana completes a $314 million funding round, with institutional investors including Alameda Research under Sam Bankman-Fried.
September 2021: Magic Eden launches on Solana, filling the gap in the Solana network's NFT trading market.
November 2021: Solana's total locked value reaches $1 billion, one-tenth of Ethereum's TVL at the time and two-thirds of BNB Chain's.
December 2021: STEPN launches on Solana, bringing significant traffic and new users to the Solana network.
February 2022: Solana surpasses Ethereum to become the blockchain with the most active developers.
November 9, 2022: FTX collapses, leading to a roughly 75% plunge in SOL within a few days.
November 2022: Tether announces the conversion of $1 billion USDT to ERC20, withdrawing from the Solana network.
December 2022: Leading NFT projects DeGods and y00ts announce their departure from the Solana network to Ethereum and Polygon.
May 2023: The popularity of BRC-20 and meme tokens leads to high gas fees, prompting many users to switch to Solana for trading. Solana's daily active addresses reach a peak of 490,000.
Late August to early September 2023: Shopify and Visa announce integrations with Solana, expanding Solana's payment services in the Web2 world.
December 2023: Solana's ecosystem undergoes a resurgence, with total locked value rising from around $300 million to $1 billion within two months.
March 2024: SOL token surpasses $200, with a market cap exceeding that of BNB, becoming the world's fourth-largest cryptocurrency.
2. Why Did Solana Collapse?
2.1 FTX Exchange Collapse, Main Cause of Solana Collapse
The prosperity and collapse of the Solana network are closely related to FTX to some extent. The collaboration with FTX helped Solana gain significant attention in the crypto space. However, it was also due to the deep collaboration with FTX that FTX's collapse led to the collapse of the Solana network.
FTX exchange held over 10% of the total SOL tokens. After the collapse of FTX exchange, there was concern that the sale of SOL would cause market panic. Additionally, due to the deceptive behavior of Sam Bankman-Fried, it also led to distrust of Solana within the crypto community. Eventually, the price of Solana tokens and the network's TVL sharply declined.
2.2 Stablecoin Exodus, Top Projects Departure, Deepening Trust Crisis
Shortly after the FTX exchange collapse incident, the stablecoin project Tether announced the transfer of 1 billion USDT from the Solana network to Ethereum ERC-20.
In December, the prominent NFT projects DeGods and y00ts on the Solana network successively announced their departure from Solana to Ethereum and Polygon networks.
The departure of important projects from the Solana network signifies official skepticism towards Solana. They also mentioned concerns about network technical security issues, further exacerbating the trust crisis surrounding the Solana network.
2.3 Competition from Other Blockchains
As the crypto world continues to grow and expand, more and more teams are becoming aware of the issues inherent in the Ethereum network, including the Ethereum team themselves, who are working to address these problems.
Similar to the Solana team, teams such as Aptos, Sui, and others are building new blockchains with low fees and high efficiency. There are also Layer 2 teams developing on the Ethereum blockchain, such as Optimism and Arbitrum.
The establishment of these blockchains provides users with more choices, and Solana needs to face competition from more blockchains that offer lower fees and decent performance.
3. What's Behind Solana's Resurgence?
3.1 Cryptocurrency Market Recovery
With Bitcoin halving imminent, the crypto market is once again warming up for a bull market. The approval of Bitcoin spot ETFs has likewise attracted more funds into the crypto market. Solana, as a member of the cryptocurrency world, is also affected, which bodes well for the overall development of the ecosystem.
3.2 Proactive Development Efforts
Despite the near-devastating impact of FTX's collapse on Solana, the network continues to boast a leading number of active developers compared to other blockchains. The team continues to hold hackathon events in multiple cities, interacting with developers from around the world to strengthen and expand the ecosystem.
Furthermore, the team continues to address and optimize the long-standing issue of downtime, introducing new storage data methods such as "state compression" to significantly reduce storage costs. Continuous building efforts help rebuild confidence within the community.
3.3 Memecoin Push
Meme tokens have played a crucial role in the rebuilding of Solana, with tokens like SILLY, WIF, BONK, BOME, and SLERF successively contributing to the wealth effect. This effect has been a key factor in the increased trading volume and market attention on the Solana network.
As meme tokens attract funds into various DeFi protocols within the Solana network, they have driven the Total Value Locked (TVL) to continuously rise, consequently lifting the price of the SOL token.
4. How to Buy SOL Tokens
The resurgence of the Solana network is now a certainty. For users entering the network currently, besides participating in on-chain projects to earn airdrop rewards, investing in SOL tokens is also an option.
The MEXC platform provides both spot trading and contract trading for SOL tokens, with leverage of up to 200 times. Depending on your investment preferences, you can choose the corresponding trading type for investment. We will demonstrate how to buy SOL tokens on MEXC using spot trading as an example.
Log in on the MEXC App, enter SOL in the search box on the homepage, select [Spot] to enter the K-line page, and click [Buy] to enter the trading page. Choose the order type, such as limit order, input the quantity, and click [Buy SOL] to complete your purchase.
Disclaimer: This information does not provide advice on investment, taxation, legal, financial, accounting, or any other related services, nor does it constitute advice to purchase, sell, or hold any assets. MEXC Learn provides information for reference purposes only and does not constitute investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. The platform is not responsible for users' investment decisions.