three explanation why the Solana (SOL) worth might see one other upward development in 2022

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Solana (SOL) has grown to be a high contender within the sensible contract business, and over the previous yr the Whole Community Worth (TVL) has elevated by $ 660 million, spanning greater than 40 decentralized functions to an all-time excessive of over $ 11 billion.

Regardless of this progress, traders have cause to wonder if the present $ 56 billion market cap is warranted and the way it compares to competing networks like Binance Good Chain (BNB), Avalanche (AVAX) and Polygon (MATIC).

Avalanche, Solana, Binance Coin and Polygon, worth in USD. Supply: TradingView

The evaluation of the worth growth over the past 6 months reveals an apparent decoupling of Terra (LUNA), Solana and Avalanche in comparison with different opponents of the sensible contract platform.

There’s a robust institutional urge for food for the Solana ecosystem

Solana’s market cap is greater than double that of Avalanche and Terra with a market cap of $ 26 billion. A seek for the most recent Solana information on Cointelegraph reveals an thrilling array of institutional investments, from a personal token sale of $ 314 million by Solana Labs in June to a $ 18 million fundraiser in September by Solana DEX -Mission Orca vary.

There may be strong proof of a rising ecosystem, as measured by investor appetites. Nevertheless, to know how profitable Solana’s scalability answer is, we have to consider its utilization metrics.

A have a look at the variety of lively addresses on the Solana dApps is an effective begin.

Solana, Ethereum, Avalanche and Polygon 7-day most lively dApps. Supply: DappRadar

Ethereum’s main dApp based on lively addresses is Uniswap with 188,200. Therefore, Raydium’s 97,600 weekly customers are fairly spectacular contemplating it solely launched 10 months in the past. As of February 2021, Uniswap already held over $ 4.three billion in TVL.

As for Solana’s NFT market Magic Eden, its 58,400 weekly lively addresses additionally make up greater than half of Ethereum’s OpenSea, absolutely the chief within the sector by way of quantity and consumer exercise.

Avalanche’s consumer exercise is closely targeted on the decentralized finance app Dealer Joe, however its $ 715 million weekly quantity pales compared to Uniswap’s $ 22.1 billion or $ 12.5 billion from Raydium. The identical might be mentioned of Polygon, which has $ 573 million in buying and selling exercise on its QuickSwap DEX.

Solana has the third largest futures market

Solana at present holds the third largest open curiosity in futures, which is probably the most related metric for spinoff contracts. This indicator aggregates the entire variety of contracts held by market individuals no matter latest buying and selling exercise.

Solana futures aggregated open curiosity. Supply: CoinGlass

Regardless of the sharp decline because the November eight peak to $ 1.9 billion, Solana ranks third within the derivatives markets by measurement with present open curiosity in futures of $ 860 million. For instance, Binance Coin (BNB) futures maintain $ 520 million, adopted by Terra (LUNA) at $ 430 million.

Solana is a frontrunner in TVL, consumer and derivatives markets

Undoubtedly, there’s a formidable quantity of exercise emanating from Solana’s on-chain information and derivatives markets. The community’s TVL has elevated 15x within the final 6 months and Solana’s dApps customers are virtually half of the customers on the Ethereum community.

Solana seems to be rapidly closing the hole on three key metrics: TVL, lively customers, and derivatives markets. Opponents like Terra, Avalanche, and Polygon appear far behind, which can justify the market cap premium.

The views and opinions expressed listed here are solely these of author and don’t essentially replicate the views of Cointelegraph. Each funding and buying and selling motion entails dangers. You need to do your individual analysis when making a choice.