3 reasons why Solana (SOL) prices may see additional increases in 2022

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Solana (Sol) Has become a top competitor in the smart contract industry. In the past year, the total value lock (TVL) of the network has increased by US$660 million, involving more than 40 decentralized applications, setting a record high of more than US$11 billion .

Even with this growth, investors still have reason to question whether the current market value of $56 billion is reasonable and how it compares with competing networks such as Binance Smart hain (Bitcoin), avalanche (AVAX) And polygon (Matic).

Avalanche, Solana, Binance Coin and Polygon are priced in U.S. dollars. Source: TradingView

By analyzing the price performance of the past six months, Terra (LUNA), Solana and Avalanche have a clear decoupling compared with other smart contract platform competitors.

Solana’s ecosystem has strong institutional needs

Solana’s market value is more than twice that of Avalanche and Terra, and both companies have a market value of $26 billion.Searching for the latest Solana news on Cointelegraph will generate a series of exciting institutional investments, including $314 million in private tokens Solana Labs was sold in June and Solana raised $18 million in September DEX project Orca.

From the perspective of investor interest, there is solid evidence that the ecosystem is constantly evolving. However, to understand how successful Solana’s scalability solution is, we must evaluate its usage metrics.

Checking the number of active addresses on Solana’s DApp is a good starting point.

Solana, Ethereum, Avalanche and Polygon are the most active dApps in the past 7 days. Source: DappRadar

The leading DApp in Ethereum’s active address is Uniswap, which has 188,200. Therefore, considering that Raydium was only launched 10 months ago, its 97,600 users per week is quite impressive. At the same time, as early as February 2021, Uniswap already held more than US$4.3 billion in TVL.

As for Solana’s NFT market Magic Eden, its 58,400 weekly active addresses also account for more than half of Ethereum’s OpenSea, which is the absolute market leader in the industry in terms of volume and user activity.

Avalanche user activity is highly concentrated on Trader Joe’s decentralized financial application, but compared with Uniswap’s $22.1 billion or Raydium’s $12.5 billion, its weekly transaction volume of $715 million is dwarfed. The same is true for Polygon, whose QuickSwap DEX trading activity is US$573 million.

Solana has the third largest futures market

Solana currently holds the third largest open interest in futures contracts, which is the most relevant indicator of derivatives contracts. Regardless of recent trading activity, this indicator aggregates the total number of contracts held by market participants.

Solana futures total open positions. Source: CoinGlass

Although it has fallen sharply since reaching its peak of US$1.9 billion on November 8, the current open interest in futures of US$860 million ranks Solana as the third largest derivatives market. For example, Binance Coin (BNB) futures holds 520 million U.S. dollars, followed by Terra (LUNA) holding 430 million U.S. dollars.

Solana leads the market in TVL, users and derivatives

There is no doubt that the amount of activity in the on-chain data and derivatives market from Solana is staggering. In the past six months, the TVL of the network has increased by 15 times, and Solana’s DApps users are almost half of the number of Ethereum network users.

Solana seems to be rapidly closing the gap between three important indicators: TVL, active users, and the derivatives market. Competitors such as Terra, Avalanche and Polygon seem to be far behind, which may justify the market value premium.

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