As Solana’s price fell, on-chain activity spiked, suggesting strong network fundamentals. Could this be a sign of an imminent rebound? This analysis dives into Solana’s on-chain data, explores potential reasons for the price drop in June and examines upcoming catalysts that could fuel a price spike.
Key takeaways:
SOL experienced significant price fluctuations in June, reaching a high of $175 on June 5 and a low of $124 on June 24. The price ultimately closed at $144 at the end of the month.
The filing of spot Solana ETF applications by VanEck on June 27 and 21Shares on June 28 led to a 10% price jump in SOL, reflecting investor excitement.
Daily transaction volume on the Solana network increased by nearly 34%, from 32.7 million on June 1 to 43.8 million by June 30, indicating growing user adoption and network activity.
The monthly average of non-vote transactions on Solana reached 915.15 million in June, the highest level in two years.
Solana captured a significant share (nearly 25%) of the DEX market, with a total DEX trading volume of $38.4 billion in June.
The Solana Foundation enhanced network security by removing operators engaging in sandwich attacks from its delegation program.
Solana ranked fourth in NFT sales volume with $68.5 million in June (26% decrease compared to May). The number of NFT transactions on Solana reached over 798k.
What You’ll Find in This June Solana Ecosystem Analysis:
At the end of June, SOL closed at $144. This bullish trend was fueled by the filing of the first spot Solana exchange-traded fund (ETF) applications in the United States by VanEck on June 27 and 21Shares on June 28, which sparked a wave of investor excitement. SOL’s price jumped 10% in one day following VanEck’s filing, continuing an upward trend that began in late May. Analysts believed that spot Solana ETFs, similar to the recently approved spot bitcoin ETFs, could significantly benefit the price of SOL.
On-chain data from the Solana network shows an increased daily transaction volume, a trend also seen in May. The network processed 32.7 million transactions on June 1, and that number rose steadily throughout the month, reaching a whopping 43.8 million by June 30. This represents a nearly 34% increase in daily transactions over the course of June, suggesting growing user adoption and network activity.
Number of daily transactions on Solana in May and June 2024. Data source: Artemis
Data from The Block also shows that the monthly average of non-vote transactions – including transfers, smart contract executions, and DEX trades – on Solana reached a staggering 915,15 million in June, the highest level in two years.
While overall network activity on Solana increased in June, the number of new addresses joining the network showed signs of slowing. Compared to May’s figure of 26.65 million new addresses, June saw a slight decrease, settling at 25.4 million. In terms of daily active users, Solana saw a spike on June 4 and June 26, reaching 2 million each day. By the end of the month, however, that number had dropped to 1.6 million on June 30.
Number of daily active addresses on Solana in May and June 2024. Data source: Artemis
The total value locked (TVL) within the Solana ecosystem witnessed a steady decline throughout June. Starting at $4.8 billion on May 1, the TVL dropped to $3.4 billion by June 30. This represents a significant decrease of roughly 29% in locked funds over the course of the month. However, despite this monthly decline, Solana’s TVL has still grown significantly year-over-year. On January 1, 2024, the TVL was only $1.4 billion. Overall, Solana’s TVL has increased 140% in six months.
Solana TVL in 2024. Source: DefiLlama
This TVL is a positive indicator for the Solana network. It suggests that more users and developers are actively using the platform, locking up their crypto assets in DeFi applications and other services. This increased engagement reflects a growing demand for Solana and its projects.
Furthermore, a high TVL can boost investor confidence. It showcases the network’s robustness and growing adoption, which can generate positive sentiment and attract further investment. This increased buying pressure could translate into a higher price for SOL.
Despite ranking fourth in TVL, Solana has emerged as a major player in the DeFi space. This is evident in its impressive second place for decentralized exchange (DEX) volume by chain. This suggests that even though users might not be locking up as many assets in Solana DeFi protocols compared to some competitors, they are actively using Solana’s DEXs for trading, highlighting the network’s growing appeal and potential.
TVL across all chains. Source: DeFiLlama
Solana Ecosystem Updates
For the Solana ecosystem, June was marked by a focus on security, the introduction of new features, and continued expansion.
Security Takes Center Stage
The Solana Foundation took a proactive step against malicious activity by removing certain operators from its delegation program. These operators were identified as engaging in “sandwich attacks,” a predatory tactic that exploits transaction fees. This move demonstrates the Foundation’s commitment to a secure and trustworthy network.
Transforming the User Experience
Moreover, on June 25, the Solana Foundation launched tools called Solana Actions and blockchain links or “blinks” that allow any website, app, social media platform, and QR codes to become launch points for crypto transactions on the Solana blockchain.
Users can now seamlessly buy, sell, or trade crypto directly within the applications they already use. The tools are similar to Frames on Farcaster but are designed to work on any website, including X.
Colosseum Raises $60M
The Solana accelerator program, Colosseum, closed its first fund at $60 million. This substantial investment will fuel the growth of promising Solana-based startups and accelerate innovation within the ecosystem.
Loyalty Programs Go Digital
On June 12, Solana Labs, the company behind the Layer-1 blockchain Solana, introduced its new project Bond, a customer loyalty platform. This platform leverages blockchain technology to create secure and transparent loyalty programs for businesses and a more rewarding experience for consumers.
Circle and Solana Partner on Payments
On June 12, Circle announced a collaboration with Solana to integrate programmable wallets into their payment solutions. The integration will occur in two phases. The first phase will focus on programmable wallets, enabling developers to automatically manage assets based on predefined rules, and sponsored transaction fees through its gas station feature.
The second phase will introduce support for NFTs and program interactions via the Smart Contract Platform. This move will align Solana with other blockchains already supported by Circle’s Web3 services, including Ethereum, Polygon, and Avalanche.
Are Solana ETFs on the Horizon?
The prospect of a spot Solana ETF has become a hot topic in the cryptocurrency world. With several investment firms filing applications with regulators, the possibility of a regulated Solana product entering the U.S. market seems closer than ever.
On June 27 and 28, two major players, VanEck and 21Shares, filed S-1 registration statements with the U.S. Securities and Exchange Commission (SEC) for a spot Solana ETF. The firms believe Solana’s native token should be treated as a commodity.
VanEck’s head of digital assets research, Matt Sigel, underscored the strong demand for Solana-based investment products, driven by its rapid technological advancements, decentralized nature and robust ecosystem.
However, Bloomberg ETF analyst Eric Balchunas said that the approval of a spot Solana ETF in the U.S. may only be possible with a change in the administration and the head of the SEC. Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, argues that it would have been more prudent to clarify SOL’s alleged security status before VanEck filed for a spot Solana ETF.
The applications by VanEck and 21Shares follow the recent filing by cryptocurrency asset manager 3iQ for a spot Solana ETF in Canada, marking a first for North America.
According to Bloomberg ETF analyst James Seyffart, over $1 billion worth of Solana exchange-traded products (ETP) are already available worldwide, including the 21Shares Solana Staking ETP and the ETC Group Physical Solana product in Europe, based on data from June 20.
The recent wave of filings for Solana ETFs shows that major institutions are increasingly interested in Solana-based products. This growing interest likely stems from Solana’s technological strengths and its growing presence in the market. As a result, Solana seems to be gaining wider acceptance from established financial players.
Solana Meme Coins
In June, while some meme coins experienced a rollercoaster ride with a positive ending, others faced a downward trend.
The price of Dogwifhat (WIF) showed an upward trend throughout June. Starting at $3.38 on June 1, WIF dropped significantly to $1.54 on June 24. By the end of the month, Dogwifhat had risen over 27% since 21Shares filed its S-1 with the SEC on June 28, reaching $2.11 on June 30.
Similar to Dogwifhat, Bonk (BONK) experienced a negative price trend throughout June 2024. On June 1, Bonk started the month strong at around $0.00003420. However, the price dipped throughout the month, reaching a low of $0.00001910 on June 24. Following the applications by VanEck and 21Shares for spot Solana ETF, BONK’s price saw a noticeable jump. The price rose to $0.00002483 (+30%) on the same day.
BONK/USD price index. Source: CoinGecko
Meanwhile, MAGA (TRUMP), the second largest PolitiFi coin by market cap ($290 million), also faced significant challenges in June. In May, the meme coin surged to new highs amid speculative trading and rumors of Donald Trump’s involvement (though the coin has no connection to Trump). However, these gains were quickly reversed following new rumors that Donald Trump’s team launched an “official” token on Solana.
Donald Trump’s team hasn’t confirmed the token’s launch, but TRUMP fell 43% from $10,8 to $6.15 on June 18 following the rumors. By the end of the month, the coin had recovered only slightly, closing at $6.79.
MAGA/USD price index. Source: CoinGecko
Interestingly, the Jeo Boden (BODEN) token linked to Trump’s main presidential rival, Joe Biden, fell over 41%, too.
Contrary to expectations, the top PolitFi meme coins, including BODEN, MAGA, TREMP, and TRUMP, also failed to rally following the June 27, 2024 presidential debate. However, Trump’s vice presidential pick is expected to be the next significant event in the PolitFi space and could potentially trigger the creation of new meme coins related to the chosen running mate.
The broader market trends also impacted daily fees and revenue for platforms facilitating meme coin trading. For instance, Pump.fun, a Solana-based meme coin marketplace, saw its daily fees plummet to an average of just about $605,000 on June 26, marking a 30% decrease week-over-week.
Solana DEXs
June was a busy month for Solana’s decentralized exchange (DEX) ecosystem, with new project launches, token airdrops, and continued growth in market share.
Solana Layer 2 Network Sonic Secures $12 Million in Funding
Sonic, a gaming-focused Layer 2 network built on Solana, raised $12 million in a Series A funding round. This round brings Sonic’s total funding to $16 million, having previously raised $4 million in a seed round in 2022.
Sonic offers an ultrafast on-chain gaming experience with minimal transaction costs. Their mainnet and token launch are expected later this year.
Zeta Markets Launches ZEX Token
Zeta Markets, a popular Solana-based DEX, airdropped their new ZEX token to incentivize user participation on their platform. Over 80 million ZEX tokens were distributed, and users have 90 days to claim them.
Squads Labs Raises Funding and Launches Retail Wallet
Squads Labs, the main developer of the Solana-based multisig protocol Squads, raised $10 million in a Series A funding round led by Electric Capital. This round brings Squads’ total funding to $22.5 million.
Additionally, the company launched their retail-focused iOS wallet app called Fuse on public TestFlight. Fuse aims to simplify digital asset management for users by eliminating the need for seed phrases and offering advanced security features.
Solana DEXs Capture Market Share
Solana is capturing a significant share of the DEX market. In early 2021, Solana had a market share of nearly 0%, but by May 2024, that number had jumped to 24%. In a June 18 report, venture firm Pantera Capital noted that Solana recorded over 60% of the new volume in decentralized exchanges in May.
Experts attribute this growth to Solana’s unique architecture, which offers better performance due to its integration of hardware and software. Additionally, Solana has become a popular platform for memecoins and DApps.
While Ethereum held onto the top spot in June with a total DEX trading volume of $48.7 billion, Solana made a strong showing, capturing the number two position with a total volume of $38.4 billion.
Solana DEX trading volume reached 38.4 billion in June (nearly 25% market share). Source: DefiLlama
Additional data from Dune Analytics shows that Solana’s total daily DEX transactions reached $13.1 billion on June 30, and this number has been actively growing throughout 2024. This indicates not only an increase in volume but also a growing user base actively participating in Solana’s DEX ecosystem.
Will Solana Rise in a Competitive Market?
June showed a complex performance for Solana. While the SOL price dropped due to internal network problems and a strong showing from Ethereum, on-chain activities indicated robust growth in user adoption.
The end of June saw a price increase fueled by the first spot Solana ETF filings in the US, hinting at potential future growth. These ETFs, if approved, would allow regular investors to easily buy into Solana, potentially bringing a wave of new money and pushing the price up. The buzz surrounding these proposals has already caused a price jump, and further developments could keep this momentum going.
However, there are some clouds on the horizon. The number of new users joining Solana dipped slightly, and daily active users declined towards the end of June. This means Solana needs to find ways to keep existing users engaged and attract new ones.
The decline in Solana’s TVL throughout June raises concerns, but the significant year-over-year growth remains a positive indicator. The future outlook for Solana’s DeFi space will depend on the network’s ability to attract and retain users and developers, as well as the overall market conditions for cryptocurrencies. Continued innovation and improvements in security, as seen with the removal of malicious operators, will be crucial for sustaining confidence in the Solana ecosystem.
On the bright side, Solana is constantly innovating. New features like Solana Actions aim to make the platform easier to use, while projects like Bond and programmable wallets could attract a wider audience. Partnering with companies like Circle also further strengthens Solana’s position in the crypto market.
Competition from other blockchains, especially Ethereum, remains fierce. Solana needs to address internal network issues and highlight its unique strengths to stay ahead. Regulatory hurdles could also slow things down, especially regarding the approval of ETFs.
Looking ahead, Solana is cautiously optimistic about its future. Continued innovation, a focus on security, and leveraging institutional investor interest are the keys to success. While challenges exist, by keeping users engaged, expanding its ecosystem, and forging strategic partnerships, Solana has the potential for significant growth and a stronger market presence in the coming months.