When the market value of SOL exceeds 100 billion, let's talk about the potential and constraints of Solana

Author: Wenser, Odaily Planet Daily

On November 10, Coinmarketcap data showed that the market capitalization of SOL briefly surpassed $100 billion, overtaking the traditional listed company Vanguard Group, ranking 192nd among 20,666 global assets; on the 11th, according to data from 8 marketcap, SOL's market capitalization fell back to $97.78 billion, with a 7-day increase of 27.83%, ranking 199th among 20,666 global assets, and 4th in cryptocurrency market capitalization. Meanwhile, professionals from institutions such as Bitwise, Standard Chartered Bank, and Coinbase have expressed high recognition of the subsequent development of the Solana ecosystem.

Odaily Planet Daily will take a look with readers at the secrets behind "Solana's surge past $100 billion market capitalization."

Market Outlook Overview: Solana is the Future

Since the FTX crash in 2022, the popularity of the Solana ecosystem dropped to a freezing point, with the SOL price falling below $10 (on December 30, 2022). However, with continuous development from the official team and the persistent efforts of Solana ecosystem developers and project parties, the Solana ecosystem has ultimately experienced a revival through the development of various sectors such as RWA, DePIN, DeFi, and meme coins.

In addition, considering Solana's previous financing stage's "capital lineage," numerous investment institutions, traditional financial institutions, and even relevant departments in the U.S. political and economic sectors hold a positive attitude towards it. Many institutions and individuals have publicly voiced their support for the Solana ecosystem, with the following being representative viewpoints:

The low point of SOL price occurred two months after the FTX crash

President of The ETF Store: Predicts several new spot cryptocurrency ETFs, including SOL, will apply this week

Nate Geraci, President of The ETF Store, stated: "I predict that issuers will submit several new spot cryptocurrency ETF applications this week, including XRP, SOL, ADA, etc. Assuming multiple issuers are well-prepared for the election results, being a bit aggressive now is not a bad thing."

Arthur Hayes: During the U.S. election, Solana will be "high beta Bitcoin"

Arthur Hayes, co-founder of BitMEX and Chief Investment Officer of Maelstrom, previously expressed optimism about Solana before the U.S. elections in early November, referring to it as "high beta Bitcoin" on the Unchained podcast. He explained that Solana is a good choice due to its strong liquidity; if Bitcoin performs well, Solana is likely to rise.

Additionally, Hayes stated that in the long run, who wins the U.S. election is not important, as the primary impact on digital assets will be the Federal Reserve's decision on whether to cut interest rates on November 7.

Hayes also expressed a preference for SOL over ETH, believing that Ethereum is currently "too slow" and needs to change its narrative to alter perceptions of its poor performance in recent months. He pointed out that Solana currently occupies "mind share," acts quickly, and when the market is booming, it is likely to outperform Bitcoin, while the "beta value coefficient" of Ethereum and Bitcoin is the same, or even slightly lower.

Trump's Election: A Positive for Solana and Bitcoin

Previously, with Donald Trump's victory in the 2024 U.S. elections, a surge of Trump-related tokens and prediction activities quickly emerged on the Solana (SOL) blockchain, highlighting the deep intertwining of blockchain and political events. Meanwhile, the decentralized prediction market Polymarket, which differs from traditional polls, successfully predicted Trump's victory by focusing on capital flows and changes in market sentiment, thus becoming an effective reference for analyzing political situations.

Moreover, some believe that Trump's successful election will lead to crypto-friendly policies, directly benefiting Solana and Bitcoin—Solana, as an important platform for U.S.-based DeFi and NFT projects, is expected to attract more innovative projects and capital injection in a relaxed regulatory environment, potentially accelerating user growth and capital accumulation. Furthermore, as a U.S.-based blockchain platform, Solana is expected to gain approval for a SOL ETF application with Trump's election, further boosting its influence in the capital market.

Coinbase: Solana's on-chain trading ecosystem profits second only to stablecoins and L1 network fees

Coinbase analysts noted in a report that meme tokens have been the core narrative of this bull market and are the best-performing cryptocurrency sector this year (measured by total market cap growth). Most meme coin activities occur on Solana, primarily around the increasing popularity of pump.fun as the main memecoin launch platform. To date, over 3 million tokens have been issued on pump.fun. The dominance of trading-related activities on Solana is reflected in its contribution to network transaction fees, accounting for over 82% of all non-voting fees paid on the network.

In addition to pure network fees, Solana's token issuance and trading processes also capture high value. If Solana's on-chain trading ecosystem is viewed as an "independent financial category," it currently ranks third in profitability, only behind stablecoins and Layer 1 network fees. The report stated: "Trading-related activities on Solana typically account for 75%-90% of on-chain easy fees, far exceeding other networks like Ethereum, Base, and Arbitrum. While L2 solutions also show growth and innovation, they often face different scalability challenges and user fragmentation issues compared to Solana, whose fee dynamics and user activity patterns remain distinct."

Bitwise CEO: Solana's market cap is expected to exceed $100 billion

On November 10, Bitwise CEO Hunter Horsley stated that Solana's market cap is about to exceed $100 billion, with only three cryptocurrency assets reaching this level (note: excluding USDT). That day, SOL's market cap indeed broke through $100 billion as expected, ranking as the 4th largest crypto asset.

Standard Chartered Bank Analyst: SOL reaching a new high by the end of the year seems "inevitable," with performance likely to exceed Bitcoin

Standard Chartered Bank analyst Geoff Kendrick predicted that Bitcoin will continue to rise until the end of this year, "easily reaching" $100,000 before certain Bitcoin options expire on December 27. Notably, he previously successfully predicted that Bitcoin's price would reach $80,000 before the U.S. presidential election.

"I predict that Bitcoin's price will reach $125,000 by the end of the year, which is the next level, although I note that many Trump-related trades peaked around the inauguration on January 20 after the 2016 election… Therefore, if Bitcoin does not reach $125,000 by December 31, I believe it will by January 20," Kendrick, the bank's head of foreign exchange and digital asset research, stated in an email last Sunday.

Kendrick further predicted that given the recent gains of Ethereum and Solana, Bitcoin's price increase could "benefit all investors," with some tokens potentially outperforming Bitcoin. Kendrick wrote: "It seems inevitable that SOL will reach a new all-time high by the end of this year (the historical high of $260 was set in November 2021). ETH reaching its all-time high (set at $4,866 in November 2021) may have to wait until around the inauguration, overall, we believe these assets will continue to rise, but SOL's performance may be the best."

SOL/ETH exchange rate recently hit an all-time high

Previously, according to OKX market data, the SOL/ETH exchange rate reached 0.0724 on November 6, hitting an all-time high.

Considering the above viewpoints and data, Solana's future looks bright, which naturally cannot be separated from its past performance and ecosystem efforts.

Solana's Past Performance: A Diverse Development "Meme Coin Sanctuary"

Specifically, Solana's past excellent performance is mainly reflected in the following aspects:

Ecosystem Activity: Over 123 million monthly active addresses in October, a record high

Data shows that the number of monthly active addresses on Solana reached a record high of over 123 million in October. Compared to September, the number of unique addresses signing transactions on Solana increased by over 42%. In January of this year, the number of active addresses on the network was less than 12.7 million. Analysts stated that the recent surge in Solana's activity is driven by the meme coin craze on the network, supported by platforms such as Pump.fun and the decentralized exchange Raydium, both of which have experienced strong growth in recent months.

Additionally, the "Cryptocurrency Status" report released by a16z in October showed that Solana's monthly active addresses exceeded 100 million, while Ethereum and other EVM chains had only about 57 million, indicating higher user engagement on Solana.

Capital Influx: Over $600 million in tokens bridged to Solana in October, with over 90% from Ethereum

SolanaFloor previously disclosed data showing that over $600 million in tokens were bridged to Solana from other chains in October, with over 90% coming from Ethereum.

Frequent Transactions: Solana's on-chain DEX trading volume surpassed Ethereum in October

According to Defillama data, Solana's on-chain DEX trading volume reached $52.157 billion in October, surpassing Ethereum DEX's trading volume of $41.499 billion during the same period.

Financing Profile: Solana ecosystem DApps raised a total of $173 million in Q3

According to a Messari report, institutional investment in Solana's native blockchain applications saw a revival in Q3 2024. A total of 29 decentralized applications (DApps) based on Solana raised $173 million, an increase of over 54% compared to the previous quarter. Although the number of financing rounds decreased by 37%, this funding represents the highest amount invested on the Solana chain since Q2 2022. It is reported that asset management giant Franklin Templeton plans to launch a money market fund on Solana.

Offline Expansion: Solana gift cards have launched in retail stores across Switzerland

According to previous disclosures from SolanaFloor, Solana gift cards have launched in retail stores across Switzerland, and tokens will be stored offline in the Cryptonow wallet after users purchase and activate them. This indicates that Solana is also making significant efforts in offline market expansion.

Liquidity Introduction: cbBTC launched on Solana

Coinbase previously announced that its launched cbBTC is now live on Solana, marking the first token issued by Coinbase on Solana.

Meme Sanctuary: Total market cap of meme coins on Solana exceeds $15 billion, reaching an all-time high

According to the latest data disclosed by Solana Floor, the total market cap of meme coins on Solana has exceeded $15 billion, reaching an all-time high.

Regarding the subsequent development of the Solana ecosystem, its official personnel are also confident, but its future still faces significant challenges.

Solana's Future and Concerns: Large-scale Synchronous Composability vs. Centralization of Power

Regarding the future development direction of the Solana ecosystem, Solana co-founder Anatoly Yakovenko previously provided detailed explanations in an interview.

He mentioned Solana's unique position in the blockchain field and compared its deployment with L2 scaling solutions and other L1 blockchain systems.

Solana's Advantages and Challenges: The Path to Achieving Large-scale Synchronous Composability

Previously, Anatoly Yakovenko posed the question: "What would the vitality of the Ethereum ecosystem look like without the contributions of the L2 solution Base?"

This question arose while observing Base's growth metrics, especially in terms of user activity and transaction volume. He then elaborated: "In my view, scalability, infrastructure focus, and transaction efficiency are Solana's three major advantages," while also recognizing the challenges Solana faces in the evolving blockchain technology landscape and the further development of the platform.

Yakovenko emphasized Solana's unique architecture, which aims to democratize access to transaction validation. Unlike traditional finance, Solana allows anyone to set up a validator and submit transactions directly, bypassing intermediaries. This level of decentralization is difficult to replicate in traditional finance. While this functionality exists, he also acknowledged that effectively scaling it remains a challenge.

Yakovenko compared Solana with Ethereum and various L2 solutions, highlighting the trade-offs between L1 and L2. L2 solutions typically use centralized orderers for low-latency transaction sorting. However, these can lead to congestion issues similar to those faced by L1 chains. While L2 is often seen as a short-term solution to congestion, it can face scalability bottlenecks when multiple applications or markets utilize them.

He emphasized that Solana's strategic focus is on building a robust L1 chain capable of supporting high throughput without the need for L2 solutions.

Another key factor is synchronous composability, meaning multiple applications can interact in real-time on a single chain. He believes this is crucial for DeFi, as single-chain or application-specific L2 solutions cannot support this level of composability, thus limiting scalability. Solana's final competitive advantage lies precisely in this: it is fully committed to large-scale synchronous composability, setting it apart from Ethereum and L2 chains.

Additionally, Solana's advantage lies in its execution capability. While Ethereum is scaling through L2, Solana's development remains focused on perfecting its L1. He acknowledged that one day, blockchains will provide similar functionalities to Solana and offer faster iterations, but for now, Solana's pace of improvement keeps it far ahead of its competitors. The core of Solana's potential lies in refining its infrastructure to support fairer and more open transaction processing, aiming for a truly decentralized future, which will position Solana as one of the leading blockchains in the coming years.

Of course, the issue of centralization of power remains one of the market's concerns regarding the Solana ecosystem. A recent representative viewpoint comes from Edward Snowden's remarks.

Snowden: Calls for Solana to Decentralize, Questions VC's Potential Impact on Solana

Edward Snowden, the "Prism" whistleblower, spoke about decentralization issues at the Near Redacted conference held in Bangkok, Thailand. When discussing topics such as cryptocurrency, artificial intelligence, and blockchain technology, Snowden used Solana as an example to discuss the impact of VCs on blockchain projects—describing Solana as "born in prison" due to its significant VC funding, which he believes may hinder its blockchain network's ability to operate independently.

While he acknowledged Solana's rapid growth, he also expressed concern over excessive ownership being transferred to investors. However, he simultaneously pointed out that Solana may "achieve something" in the future.

Conclusion: The Endpoint of Solana's Ecosystem is Far from Over

As of the time of writing, Solana's price has returned to around $210, with its market cap once again approaching $100 billion. Meanwhile, according to information from the 8 marketcap website, Solana's market cap is currently about 6.18% of Bitcoin's; compared to Ethereum, Solana's market cap is about 26.17%.

With the potential of ETH, DeFi, and even more fields being explored in the future, the Solana ecosystem may truly stand alongside Ethereum, becoming a genuine "Ethereum killer."