The Solana blockchain is experiencing a surge in activity due to high interest in meme coins.
This frenzy has increased network usage and driven transaction fees to their highest level in a year.
High Interest in Solana Meme Coins... Increasing Network Fees and Adoption
Over the past few weeks, meme coin activity has rebounded due to the cryptocurrency rally led by major assets like Bitcoin. This resurgence has significantly increased Solana's trading volume, driving up fees. According to CryptoRank, Solana's transaction fees reached $0.15 this month, doubling from $0.08 in October and hitting a 1-year high.
According to data from DeFiLlama, this increase in network fees has significantly contributed to Solana earning around $78.14 million in fees last week, just below Tether's $93.57 million and far exceeding Ethereum's $40.9 million over the same period.
In addition to the core network, Solana-based decentralized applications (dApps) have also seen a surge in activity and fees. Platforms like Radium, Jet, Pump.fun, and Photon have played a key role in this uptrend, with Pump.fun and Photon gaining significant attention by capitalizing on the meme coin frenzy.
However, Wei Dai, a cryptocurrency researcher at 1kx Network, warned that Solana's increasing activity could lead to congestion. He noted that prolonged congestion often leads to higher minimum fees, which can alienate dApps and users, a scenario similar to what Ethereum experienced during the DeFi boom four years ago.
Nevertheless, Dai acknowledged that Solana's current congestion is primarily limited to short-term spikes, and patient users can still process transactions at low costs. However, he warned that this balance could shift if the network's infrastructure does not evolve to effectively handle the growing demand.
"Solana's congestion is 'bursty'. Current users can process payment transactions with short latency and minimum fees. But this could change if demand increases and the Solana tech stack is not improved to stay ahead of demand." - Wei Dai, 1kx Network researcher added.
Meanwhile, this surge in activity coincides with Solana achieving new price milestones. Over the past week, the price of SOL has risen nearly 20% to a new all-time high of $263, making it one of the best-performing digital assets since Donald Trump's election victory on November 5th.
