Solana (SOL) will be a top contender next year, 2022 thanks to steady ecosystem growth, institutional investment, and a healthy derivatives market.
SOL has risen to the top of the smart contract market, with the network’s total value locked (TVL) increasing by $660 million in the last year and spanning more than 40 decentralized apps to reach an all-time high of over $11 billion.
Despite this increase, investors may wonder if the present market valuation of $56 billion is fair, especially in comparison to other networks such as Binance Smart chain (BNB), Polygon (MATIC), and Avalanche (AVAX).
When comparing Terra (LUNA), Avalanche, and Solana to other smart contract platform competitors during the last six months, there appears to be a decoupling.
Institutional interest in Solana’s ecosystem is considerable.
Solana’s market cap is more than double that of Avalanche and Terra, which each have a market cap of $26 billion. Solana’s newest news on Cointelegraph reveals an intriguing array of institutional investments, ranging from Solana Labs’ $314 million private token sales in June to Solana’s DEX project Orca’s $18 million financing in September.
According to investor demand, there is significant evidence of a rising ecosystem. However, we must assess Solana’s scaling solution’s utilization metrics to determine its effectiveness.
A good place to start is by looking at the number of active addresses on Solana’s DApps.
Uniswap, with 188,200 active addresses, is Ethereum’s most popular dApp. Raydium has 97,600 weekly users, which is quite outstanding considering it was only started 10 months ago. Uniswap, on the other hand, had over $4.3 billion TVL in February 2021.
Magic Eden, Solana’s NFT marketplace, accounts for more than half of Ethereum’s OpenSea, the sector’s absolute market leader in volume and users activity, with 58,400 weekly active addresses.
The Trader Joe decentralized finance app has a high concentration of Avalanche user activity, but its $715 million monthly volume pales in compared to Uniswap’s $22.1 billion and Raydium’s $12.5 billion. Polygon, which has $573 million in trading activity on its QuickSwap DEX, can say the same.
The third-largest futures market is Solana.
Solana has the third-largest open interest in futures contracts, which is the most important measure in derivatives contracts. Regardless of recent trading activity, this indicator aggregates the total number of contracts owned by market players.
Despite a significant decline from its top of $1.9 billion on Nov. 8, Solana’s current $860 million futures open interest places it third in terms of size among derivatives markets. Binance Coin (BNB) futures, for example, have $520 million, followed by Terra (LUNA) futures with $430 million.
Solana is the market leader in TVL, users, and derivatives.
Without a question, Solana’s on-chain data and derivatives markets generate a significant amount of activity. The network’s TVL has increased by 15 times in the last six months, and the number of Solana DApps users is about half that of the Ethereum network.
In three key indicators, Solana appears to be rapidly closing the gap: TVL, active users, and derivatives markets. Terra, Avalanche, and Polygon appear to be lagging, which could explain the market capitalization premium.