Solana is experiencing a significant uptick in its user base, fueled in part by surging transaction fees on rival blockchains Ethereum and Bitcoin. As per the data from The Block, the Layer 1 network has been recording an unprecedented increase in the number of new daily addresses, hitting a seven-day moving average of 304,640 on Monday, a high point not seen since June 2022.
This bullish growth in Solana's usage demonstrates a swift escalation from last month, with more new addresses being added in the first half of May than in the entirety of April. The increase aligns with a period of swelling transaction fees on both the Ethereum and Bitcoin networks, which reached 3-month highs last week.
At the same time, Bitcoin's active addresses - those that have sent or received funds - have plunged to their lowest level since July 2021. The combination of rising fees and this dwindling activity may be prompting users to seek alternative blockchains such as Solana.
"The increase seemed to start earlier in May when fees started rising on Ethereum and had people looking for other places to transact," The Block research analyst Rebecca Stevens said. She also highlighted that the second rally could be related to "Ethereum finality issues", which might have redirected more users towards Solana and Ethereum-scaling platforms like Polygon.
Indeed, Solana's user growth seems to coincide with recent issues on the Ethereum network. Last week, Ethereum's beacon chain experienced two incidents of halted block finalization. Stevens pointed out that despite Solana facing criticism over its outages, the recent troubles on the Ethereum network might have put things in a new light, helping Solana gain a competitive edge.
Solana's native SOL token has also been charting a robust comeback. Following a significant downturn last year in the wake of the FTX crypto exchange's collapse, SOL has shown resilience with a 109% year-to-date rise. As of Tuesday, even after a minor dip of 0.9% to $20.78, it was still up 0.6% for the week, as reported by TradingView.
In an industry where competition is intense, and reliability is paramount, the recent increase in Solana's user base may be a promising sign of the network's growing appeal. As transaction costs on other networks continue to rise and scalability issues persist, more users may gravitate toward alternatives like Solana, further fueling its growth and possibly reshaping the landscape of the cryptocurrency market.
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