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A SOLid comeback – Solana’s 2024 hopes hinge on these predictions

9min Read

Solana was 2023’s comeback king. With sky-high optimism, will 2024 be any different?

A SOLid comeback - Solana's 2024 hopes hinge on these predictions

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  • SOL has jumped 7x in value since the FTX-induced downturn.
  • Solana’s network advantages and a loyal developer community helped script a comeback.

Around this time last year, Solana [SOL], the popular smart contracts network, was grappling with perhaps its biggest challenge.

One of the world’s largest crypto exchanges at that time, FTX, collapsed spectacularly, triggering a knock-on effect on entities with exposure to the bankrupt platform. The Solana ecosystem was one of them.

While not directly related to FTX, SOL was widely endorsed by the disgraced co-founder of the exchange Sam Bankman-Fried (SBF). So much so that critics held SBF’s campaigning partly responsible for the token’s price hike seen previously.

Apart from this, FTX made significant investments in projects built on the blockchain.

Little did Solana proponents know that the association would come back to haunt them big time.

The fall and rise

Native token SOL plunged to historical lows in the days following the implosion. From an all-time high of $259 recorded just a year ago, the asset sank below $9 in the dying stages of 2022.

Moreover, users, capital, and projects started deserting the network.

As per data fetched by AMBCrypto from DeFiLlama, liquidity worth $769 million was emptied from Solana between the first week of November when the issue surfaced, and the end of 2022.

The sentiment around the project, once positioned as the Ethereum [ETH] killer, was at an all-time low.

But like all good things, all bad things come to an end too!

Cut to 2023 and Solana has scripted arguably the best comeback ever in the history of cryptocurrencies.

If you believed in the long-term outlook of SOL amidst all the FUD a year back and resisted the temptation to sell, well, congrats! You’d be seven times richer in your SOL holdings as you read this piece.

Most of the gains came in the late-year flourish, as seen below. Wider market optimism, combined with Solana’s achievements during the year, propelled SOL to a $44.83 billion market cap as of this writing, the fifth-largest among all cryptos.

Source: CoinMarketCap

Source: CoinMarketCap

The jump in SOL’s price also boosted the USD value of capital invested into different projects on Solana. At press time, the TVL was $1.42 billion, reversing all the losses made in the aftermath of FTX’s collapse.

Source: DefiLlama

What’s behind the turnaround?

Nearly all the analysts that AMBCrypto spoke to hailed Solana’s fundamental advantages as the key to the turnaround. Rahul Maradiya, co-founder & global CEO of Dubai-based blockchain ecosystem CIFDAQ, said,

“Solana has a vibrant community of developers who aim to take advantage of its innate scalability. Its transaction speed, in particular, allows it to boast of many use cases.”

The sentiment was echoed by Jeff Owens, co-founder of layer 1 blockchain Haven 1, who argued,

“The fact that Solana is fast, cheap, and seems to have shaken off the reliability issues that plagued the chain in 2021 seems to indicate that Solana is here to stay.”

In fact, Solana itself credited the hard work of its developer community in flipping things around. In a statement shared over mail, Austin Federa, Head of Strategy for the Solana Foundation, stated,

“The collapse of FTX hit the entire industry hard, but the position the network is in today is entirely due to the resiliency and capabilities of Solana’s global builder community. The Solana community went back to work, built through the bear, and a year later we’re seeing the culmination of that determination and effort.”

On the face of it, these arguments hold water. Solana is one of the fastest blockchains in operation as of this writing, with an average of 3,500 transactions per second (TPS) over the last month, according to Solscan.

Theoretically, Solana can handle 50000–65000 TPS, aligning with payment giants from the Web2 world. In comparison, Ethereum, the much bigger smart contracts network, averaged between 10-13 TPS over the year.

Source: Solscan

Moreover, Solana offers exceptionally low transaction fees as well, when compared to Ethereum.

The average transaction fee paid by Solana’s users in the last epoch was 0.00003304 SOL, or $0.002, as per SOL’s market value at press time. On the other hand, Ethereum charged 48 gwei, equal to $2.19, on average to validate a transaction.

It was clear that Solana never lost out on its fundamental strengths — cost-effectiveness and speed — crucial traits for any blockchain worth its salt.

Such network advantages go a long way in attracting decentralized applications (dApps) in different realms like finance, gaming, and non-fungible tokens (NFT).

This is precisely why many of the ecosystem’s developers stuck with the network and contributed to its growth.

The year that went by

Amidst the relative calmness of the bear market, Solana focused on building high-profile partnerships with Web2 giants.

Arguably the most significant among them was the partnership with payments giant Visa. The partnership involved the extension of its stablecoin settlement capabilities to the Solana chain.

The development was frantically cheered by the Solana community because a major TradFi player considered the network for payments for the first time.

While Visa was already using Ethereum [ETH] for its pilot project, the decision to add support for Solana was motivated by the high transaction throughput and low costs.

Visa acknowledged Solana’s strategic advantages while announcing the partnership.

Apart from this, Solana announced the integration of Solana Pay, its native payments solution, with popular e-commerce company Shopify.

The integration allowed merchants and entrepreneurs to bypass high transaction fees generally associated with Web2-based third-party payment processors.

Solana’s technical prowess was recognized by peers from the Web3 community as well. MakerDAO, a leading stablecoin issuing protocol, considered using Solana instead of Ethereum for its upcoming stand-alone blockchain.

Praising Solana’s technical capabilities, Maker’s co-founder Rune Christensen stated that the PoS network would remain the best fit to address Maker’s specific needs.

He also attributed the strong developer ecosystem as a major reason behind choosing Solana.

Just the ‘Fire’ Solana needed

It’s no secret that Solana has a history of downtime issues and network halts. In fact, co-founder Anatoly Yakovenko went to the extent of terming network outages as “Solana’s curse” in one of his older interviews.

Solana suffered its first major network outage of 2023 in February, lasting nearly 20 hours. However, since then, the network has maintained a 100% uptime.

However, even these one-off glitches could be a thing of the past once Solana’s upcoming validator client, Firedancer, is set in motion. An alternative to the existing natively-developed client, Firedancer is being developed by a third party.

Solana executive Austin Federa remarked,

“At the Foundation we’re looking forward to the launch of FireDancer, an entirely new validator client for the Solana network. Having a second validator client implementation will even further increase the resiliency and reliability of the network.”

As of this writing, Firedancer’s test version has been launched, with the mainnet launch expected in the first half of 2024.

Solana finally goes BONKers

During the peak of the FTX-induced negativities, Solana introduced a dog-themed token Bonk [BONK]. The stated aim of the meme coin was to shift the focus away from ‘toxic Alameda tokenomics’.

While the asset did succeed in infusing a positive vibe into SOL initially, it quickly faded into irrelevance. However, the real show started much later.

The late-year rally and improving sentiment around the Solana ecosystem trickled down to the meme coin.

From a market cap of $10 million in mid-October, BONK exploded to $1.29 billion on the 17th of December, giving unreal 106x returns to its holders.

The surge propelled BONK to become the third-largest meme coin in the market, AMBCrypto observed using CoinMarketCap’s data.

Source: CoinMarketCap

Source: CoinMarketCap

Unlike some of the other memecoins that lack utility, BONK has use cases in the Solana ecosystem, including using the token as payment for NFTs.

What next for Solana?

With Solana all poised to end 2023 on a good note, the next question that’ll be on the mind of Solana enthusiasts will be — What to look ahead in 2024?

As far as the much-publicized ‘Ethereum Killer’ narrative is concerned, it could probably go and find some sound sleep. Most experts that AMBCrypto spoke to ruled out the possibility of Solana dethroning Ethereum soon.

Stefan Rust, CEO of independent economic data aggregator Truflation, opined,

“I don’t think Solana is an Ethereum killer. There is too much momentum and strong leadership already behind the Ethereum network to the extent that Ethereum is no longer building just with ETH. Plus the liquidity advantage that is available on Ethereum is going to be very hard to catch up with.”

However, Solana backers still have much to look forward to. On the prospects of SOL storming into the top 5 list of cryptos by market cap in 2024.

Inasmuch, Johnny Gabriele, Head Of Decentralized Finance at Web3-native incubation studio CryptoOracle, made a bold prediction.

“At the top of this bull market, Coinmarketcap will say: 1. Bitcoin 2. Ethereum 3. Solana. I believe three will live in harmony one day.”

Rahul Maradiya also gave a thumbs up to the likelihood of Solana ending up in the top 5,

“As Solana continues to trend upwards, there’s the very real possibility that BNB becomes caught up with ongoing Binance-related drama. BNB doesn’t need to crash in order for Solana to ascend. Instead, each only needs to move marginally in opposite directions.”

Mind the challenges

Perhaps the most significant impediment to achieving these objectives will come from regulators.

Remember that the United States Securities and Exchanges Commission (SEC) labeled SOL, along with a few other major cryptos, as securities in a lawsuit filed against Binance earlier in the year.

Regulatory crackdowns this year, and in general, have caused significant damage to the entities targeted. Regardless of how strong the fundamentals appear to be, it may all come down to compliance and legality in the end.

Secondly, FTX received judicial approval to liquidate the recovered crypto-assets and pay out the creditors who have patiently waited for their money since the platform’s demise last year.

The problem — It could apply significant downward pressure on SOL.

SOL was FTX’s largest holding, as per a recent report by CoinGecko. At about 55.8 million, it equated to nearly 13% of the asset’s circulating supply.

If the entirety of SOL holdings are dumped in the market, SOL’s price might well be at the risk of falling to lows seen after the collapse of the exchange last year.


Aniket Verma works as a journalist at AMBCrypto. Contrary to most who are primarily interested in merely tracking price movements of cryptos, his focus is on examining the niche intersection between cryptocurrencies and traditional finance. A so-so Bitcoin maximalist, Aniket has a strong disdain for memecoins and the unfounded frenzy they seem to generate every market season. Coming from a strong engineering background, Aniket previously worked as a Content Manager for TV9 Network. Before his stint over there, he was an Associate Multimedia News Producer at Reuters.
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