Solana (quotation SOL) is rallying at the moment, having reached all-time high after all-time high. The price rose more than 200% in August and increased more than 7.000% since the beginning of the year, according to data from CoinGecko.
This pushed Solana into the top 10 cryptocurrency by market cap. At the time of writing, Solana, which is available at most major cryptocurrency exchanges, ranks eighth.
When the price of a cryptocurrency rises so rapidly, it's always hard to know if we're about to see an equally dramatic drop. Understanding why the price has risen is one way to gauge how sustainable that growth is. Here are some reasons for Solana's growth.
1. Solana's transition to NFTs
You've probably heard of non-fungible tokens (NFTs), digital collectibles that continue to conquer the world of cryptocurrencies. By encoding ownership and copyright information into these tokens, key data is essentially embedded in every digital artwork.
Degenerate Apes was Solana's first major foray into NFTs. This collection of costumed monkeys features various traits, from glasses to sandwiches, with varying degrees of rarity. The launch had some technical issues (the team tweeted that they were "overwhelmed" by the question), but that didn't matter. The collection of 10.000 monkeys sold out in less than 10 minutes. At the time of writing, the trading volume had reached over SOL 600.000 (over $ 66 million). Those sales all needed SOL, which is a major factor in raising prices.
2. It attracts a wide range of projects and some of them are doing well
There are over 400 projects built on Solana's network, including various decentralized finance (DeFi) applications. Decentralized finance is an umbrella term for a number of projects that eliminate intermediaries (often banks) from financial transactions.
FTX and Alameda Research have built their decentralized cryptocurrency exchange called Serum on the network, which is also home to the increasingly popular USDC stablecoin. (USDC is also available on Ethereum.) Another of this month's cryptocurrencies, Audius (AUDIO), also uses the platform, which could also be a factor behind Solana's price hike. Additionally, TikTok chose Audius as its streaming partner earlier this month.
3. People are looking for alternatives to Ethereum (ETH)
Ethereum was the first programmable blockchain, a blockchain that can host other applications and cryptocurrencies, and many cryptocurrencies have followed in its footsteps ever since. Most applications are still based on Ethereum, but the network is struggling with congestion and high tariffs. Consequently, both developers and investors are looking for alternatives.
Solana is one of several programmable blockchains that are pushing for pole position. People are talking about potential Ethereum killers, but it is more likely that Ethereum will be one of the five or six leaders to emerge in the next few years. If Solana continues to do well, there is a good chance that he can win a place in that top flight.