VanEck says that despite concerns over its growth being driven by speculative memecoin activity, Solana (SOL) has a high user engagement and transaction volume due to its low-cost, high-throughput design. Critics argue that this makes SOL’s growth less notable than it appears, and raises concerns about its future potential.
Mathew Sigel, the head of digital asset research at VanEck, says that Solana’s popularity among speculative traders is due to the chain’s structural efficiencies, which attract users at a faster rate than other networks. VanEck’s analysis found that about 14.2% of Solana’s revenue comes from wash trading, compared to 2% for Ethereum.
Sigel says that Solana’s architecture encourages high transaction activity, contributing to its revenue growth. VanEck added risk disclosures to its SOL ETP prospectus to show its commitment to transparency for investors. While memecoin and NFT trading make up more than a third of Solana’s revenue, critics argue that most of its 111 million active wallets could be Sybil accounts.
Assessing genuine user activity is difficult due to blockchain data’s decentralized nature. However, VanEck says Solana’s structural efficiencies make it suitable for high-volume trading. Solana’s low transaction fees, about 1/10,000th of Ethereum’s, create a good environment for speculative trading.
VanEck believes that Solana could evolve away from speculative assets and towards sustainable applications in decentralized infrastructure and social media, as it matures.
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