- The SOL token, native to the Solana blockchain, has doubled in price since mid-December.
- Analysts are optimistic about the blockchain's future.
- Experts expect SOL's price to rebound, potentially reaching $30 or even $50 by the end of the year.
The SOL token, native to the Solana blockchain, has seen a significant increase in value, doubling in price since mid-December. It reached a high of $24 earlier this week, roughly where it stood before concerns arose about its connection to the struggling crypto exchange FTX and its sister company Alameda Research. The surge in value began after a tweet from Ethereum co-founder Vitalik Buterin expressing hope for the Solana community.
The tweet came shortly after SOL had dropped to a record low of $8.19. Buterin's comment helped to mitigate the damage caused by reports that the token was the second-largest holding of Alameda Research, whose unruly balance sheet contributed to FTX's descent into bankruptcy protection.
According to data from DefiLlama, the total value locked (TVL) on the Solana chain dropped 96% in 2022, from $6.68 billion in January to $206 million at the end of December. This decline in TVL was likely a contributing factor to SOL's initial drop in value. However, SOL's price recovery has sparked fresh hopefulness among crypto analysts and blockchain developers and executives over the blockchain's long-term future.
Critics have lambasted Solana for being too centralized and venture capital controlled. But Riyad Carey, research analyst at crypto data firm Kaiko, said "with Alameda gone, the protocol is in some sense free of that baggage and can become more community-centric." Carey also said "I think Solana definitely has a lot of staying power" and added "Will it be a top three or five chain by TVL in a year? I'm really not sure but it certainly has potential."
And Messari Senior Research Analyst Tom Dunleavy wrote in a recent research note that Solana's on-chain performance has been strong with daily active wallets interacting on major Solana protocols remaining constant post-FTX and transaction volumes and active accounts rebounding back to pre-FTX levels. Dunleavy also wrote "It is certainly an open question as to how sticky this new level of volume is; however, at the very least, a consistent level of volume with FTX exiting the ecosystem is a positive sign."
Michael Repetny, core contributor at Solana-based liquid staking protocol Marinade Finance, highlighted that as SOL's price declined after the FTX crisis, the number of validators also decreased from 2,400 to 2,000. Repetny attributed Solana's recent trading volume surge to growing interest in Solana-based meme coin BONK. "Bonk is like an entry point to the Solana ecosystem, just like people come to non-fungible tokens (NFTs) for gaming," he said, adding "With trust and faith in the Solana community, this goes beyond Sam's coin."
Stefan Rust, CEO of blockchain technology firm Laguna Labs, said Solana has "held the ground solidly" by staying within the top 20 cryptocurrencies by market capitalization post-FTX, while hitting the metrics developers seek, including a project's "distribution," "difficulty in using toolsets," "marketing and visibility" and "money." He expects SOL's price to rebound to $30 and even possibly $50 by the end of the year.
Brendon Sedo, a contributor to layer 1 blockchain Core DAO, compared Solana's current status quo to Ethereum's 2018 crash and believes that it will similarly rebound, despite increasing competition from the likes of rivals Aptos and Sui. "I think this is likely going to be the outcome for Solana, pulling off what Ethereum eventually pulled off after the dark days of the 2018 bear market," he said.