Solana: The Rise of a Blockchain Network Amidst High Transaction Fees
Solana experienced a surge in new users as the escalating transaction fees on Ethereum (ETH) and Bitcoin (BTC) pushed individuals to seek alternatives on the Layer 1 (L1) network, according to data from The Block.
Rising Transaction Fees on Ethereum and Bitcoin
The Ethereum network faced surging transaction fees due to the meme coin craze, driven by the unprecedented rally in the price, trading volume, and market capitalization of frog-themed Pepe (PEPE). Data from Messari revealed that average transaction fees reached a peak of $27.61 on 9 May, marking the highest level since May 2022.
On the other hand, the introduction of Ordinals and BRC-20 tokens on the Bitcoin network led to a significant increase in network activity and fees. Messari data showed that the average transaction fees on the chain surged to $30 on 8 May, the highest since April 2021.
Solana Emerges as the Preferred Choice
Seeking blockchain networks with lower transaction fees, users turned to Solana, making it a top contender in this pursuit. The network gained significant attention, resulting in a rise in the number of active addresses. The Block’s data indicated a remarkable 113% increase in daily active addresses on the Solana chain.
Assessed on a month-over-month (MoM) basis, Solana recorded a total of 7.72 million active addresses in April. Interestingly, with approximately two weeks remaining in May, the chain has already surpassed 7 million active addresses.
Furthermore, The Block’s data revealed a substantial growth in the number of new addresses on the chain since the end of April.
Influx of New Users
In May, Solana witnessed the creation of 4.19 million new addresses, surpassing the count of 3.76 million new addresses that joined the network in April. This surge in new address creation on the L1 network highlights the platform’s increasing adoption amidst the high transaction fees experienced on the Ethereum and Bitcoin networks.
However, while Solana’s network activity has shown growth since the end of April, data from Artemis revealed a decline in other ecosystem metrics.
Challenges and Decreasing Metrics
According to on-chain data, Solana’s total value locked (TVL) has been on a downtrend since 19 April, falling by 8% to $269.78 million at present.
Similarly, the decentralized exchanges (DEXes) within the Solana network witnessed a decline in transaction volume since the beginning of the month. Artemis data indicated a 66% drop in DEX volume on Solana since May’s commencement.