Solana (SOL) has emerged as a major competitor in the smart contract market, with the network’s total value locked (TVL) increasing by $660 million in the last year and extending over more than 40 decentralized apps to reach an all-time high of more than $11 billion.
Despite this increase, investors have grounds to ask if the current market valuation of $56 billion is warranted and how it compares to other networks such as Binance Smart Chain (BNB), Avalanche (AVAX), and Polygon (MATIC).
When comparing Terra (LUNA), Solana, and Avalanche price performance over the last six months, there is an apparent decoupling from other smart contract platform rivals.
There Is A Lot Of Institutional Interest In Solana’s Ecosystem
Solana’s market capitalization is more than double that of Avalanche and Terra, which have a market capitalization of $26 billion. An exciting 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 interest, there is significant evidence of a rising ecosystem. However, we must examine its utilization numbers to determine how good Solana’s scaling solution is.
An excellent place to start is by looking at the number of active addresses on Solana’s dApps.
Uniswap is Ethereum’s most popular dApp in terms of active addresses, with 188,200 users. Raydium’s 97,600 weekly users are, therefore, rather impressive given that it was created ten months ago. Meanwhile, as of February 2021, Uniswap has moreover $4.3 billion TVL in its possession.
In terms of Solana’s NFT marketplace Magic Eden, its 58.4K weekly active addresses represent more than half of Ethereum’s OpenSea, the sector’s absolute market leader in traffic volume and user engagement.
According to CryptoBoom News, “Avalanche user activity is centered on the Trader Joe’s DeFi app, but it’s $715 million weekly volume pales in contrast to Uniswap’s $22.1 billion or Raydium’s $12.5 billion. Polygon, which has $573 million in trading volume on its QuickSwap DEX, can also make a similar claim.”
Solana Has The Third-Largest Futures Market
Solana presently has the third-largest open interest in futures contracts, the most crucial measure in derivatives contracts. This indicator sums up the total number of market players’ contracts, independent of recent trading activity.
Despite a significant dip from the record of $1.9 billion on November 8, Solana remains the third-largest derivatives market by volume, with $860 million in futures open interest. Binance Coin (BNB) futures, for example, have $520 million, followed by Terra (LUNA) futures, which have $430 million.
Solana Is The Market Leader in TVL, Users, and Derivatives
Without a doubt, Solana’s on-chain data and derivatives markets are generating a lot of activity. Over the last six months, the network’s TVL has expanded by 15x, and Solana’s dApps users account for roughly half of the Ethereum network’s total.
Solana appears to be narrowing the gap in three critical metrics: TVL, active users, and derivatives markets. Terra, Avalanche, and Polygon appear far behind, which may explain the market capitalization premium.