Solana On-Chain Activity Soars: Is a Price Upswing Coming?
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:
Solana SOL -5.98% is an open-source blockchain platform founded in 2017 that emphasizes scalability and speed. With its unique Layer 1 network architecture, it processes over 710,000 transactions per second, enabling the creation of smart contracts and decentralized applications (dApps) for various use cases, such as decentralized finance (DeFi) and nonfungible tokens (NFTs) marketplaces. Unlike Ethereum , Solana does not require additional scaling solutions, relying on powerful computers for network maintenance and data storage. Its native cryptocurrency, SOL, is essential for transactions and network security through staking.
In June 2024, the price of Solana’s native token, SOL, experienced a downward correction. The chart shows some significant fluctuations throughout the month, with a high of $175 on June 5 and a low of $124 on June 24.
SOL’s price drop in June wasn’t just a reflection of the overall crypto market downturn. Internal problems with the network, particularly concerning maximum extractable value (MEV), added fuel to the fire. Some validators on the Solana network were caught exploiting traders through “sandwich attacks.” These attacks involve manipulating transaction prices to profit at the expense of everyday investors unfairly. This incident, coupled with an outperforming Layer 1 blockchain rival, Ethereum, and stagnant inflows into the Solana ecosystem, likely contributed to the decline
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