The Solana network has been on a tear this month, experiencing a substantial increase in its user base, leading to the successful breach of the critical $20 price resistance level for its native cryptocurrency SOL.
Despite being generally in the red this month, Solana’s price has been on an upward trajectory since last Thursday, surging roughly 10%. Over the past 24 hours, the tenth largest crypto asset by market cap has increased by about 1.2% and was trading at $20.72 at press time on Monday.
SOL’s growth can be attributed to several factors, key among them the impressive surge in the number of active users on the Solana network. According to data from Dune Analytics, the number of active Solana users on May 1 skyrocketed to roughly 3.5 million, marking an astonishing 146% surge compared to April 1. This surge brings the total number of unique active users on Solana’s network to an all-time high of 39.75 million.
According to experts, the surge in Solana’s user base can be attributed to the high transaction fees on Ethereum and other networks, particularly those involving NFTs, which have prompted users to explore alternative Layer 1 networks, with a considerable number migrating to Solana.
On Sunday, May 28, Tom Dunleavy, a former analyst at onchain analysis firm Messari highlighted Solana’s exponential growth in user numbers noting that Solana has experienced a massive spike in active users this month, making it difficult for Ethereum maximalists to ignore the platform.
“Even if you are an Eth maxi hard to not have a small allocation here with so users, devs and call options not priced in (ie mobile, neon, things eth can’t do (ie order book, xnfts)” tweeted Dunleavy.
Solana’s popularity has also been fueled by the network’s expansion into AI with a new Chat GPT plugin. The plug-in, which Solana Labs had hinted at in late April, was eventually integrated into the network last week and is aimed at facilitating user onboarding into the web3 space. Among many other uses, the plug-in allows users to perform various tasks such as buying and listing NFTs, token transfers, transaction tracking and discovering NFT collections based on their floor prices.
Elsewhere, despite Solana’s explosion in the network activity, its total volume locked (TVL) had dropped slightly from about 280 million at the start of April to 270 million at press time, according to DefiLlama.
That said, despite the slowdown in TVL, Solana’s surging user base and positive price momentum have relieved investors who are still contending with the post-FTX debacle losses. As users seek alternatives to high-fee networks, Solana’s performance and increasing adoption could help get SOL’s price out of the woods.