Bankless: What catalysts will reverse Solana’s decline?

Bankless

2024-04-11 14:10

Read this article in 9 Minutes

AI summary

View the summary

Original title: Will Solana's Rough April Turn Around?

Original author: David C, Bankless

Original translation: Deng Tong, Golden Finance

So far, Solana's April has indeed been... turbulent.

Despite the stability of the SOL price and some serious congestion issues that have led to widespread transaction failures, there are reasons to be bullish, and some positive catalysts are ready to turn around Solana's situation in April.

This month's crowded airdrop program continues to bring new capital to the ecosystem, and the development of protocols such as Zeus and Jito has given airdrop participants a reason to stay.

Today, let’s take a look at just how much airdrop stimulus there is in the Solana ecosystem, and examine some of the hot protocol developments that could draw more attention to the network and greatly expand its reach.

SOL April Airdrop

April has started with a very strong momentum for airdrops. Following last Monday, Wormhole brought in around $2.5 billion to the market, while Tensor brought in (initially) around $230 million.

These airdrops, deployed in the form of SPL tokens, bring circulating liquidity back to the ecosystem, whether people are using the stimulus to secure profits or to fund their meme ambitions.

Wormhole and Tensor mark only the first half of confirmed airdrops for April.

Next up are Parcl, a real estate perpetual platform; Kamino, a DeFi suite; and derivatives platform Zeta Markets, which together could bring in more than $300 million in revenue for Solana. Together, this equates to at least $3 billion in stimulus for the Solana ecosystem. Additionally, the end of these bounty programs marks the start of new seasons and events that can attract more users to the ecosystem.

Solana Tokens Integrate into Dominant Narratives

While some of the traffic from these airdrops may find its way into memes, the alignment of the other two tokens with this cycle’s dominant narratives and their strong price action could also attract investment and new attention to the Solana ecosystem.

BTC communication layer Zeus and leading liquidity staking solution Jito are poised to become standouts in the ecosystem, leveraging two of this cycle’s dominant narratives – BTCfi and restaking.

Zeus Network

Zeus Network, one of two projects on the Jupiter LFG launchpad, provides a bridgeless “communication layer” between the Bitcoin and Solana ecosystems, potentially unlocking over a trillion dollars of capital for the latter.

Backed by the founders of Solana and Stacks (a leading Bitcoin L2), Zeus Network intends to build an ecosystem that connects the two chains. The first product will be Apollo, a Bitcoin staking protocol currently earning yield in testnet. There will also be a native, Bitcoin-backed stablecoin between the Bitcoin and Solana ecosystems, cross-chain NFT tools, and lending applications that connect the two ecosystems.

With the halving approaching, Bitcoin NFTs performing strongly, and BTCfi continuing to grow, if Zeus can grow its ecosystem well, they can benefit greatly from Bitcoin's momentum and open up a whole new market for Solana.

Jito and StakeNet

Jito's recent stellar price performance has brought renewed attention to the airdrop that started it all, especially as crypto summer approaches and the similarities between the two.

In January, Jito founder Buffalo announced the launch of Stakenet, a decentralized primitive for liquid staking protocols, oracles, and restaking. The last feature has received a lot of attention recently, especially considering Jito’s continued growth post-airdrop and share of all liquid staking on Solana.

While restaking protocols like Picasso Network already exist on Solana, Jito’s overall dominance prompted Picasso’s founders to announce that they will be integrating into Stakenet. Statements and discussions like the ones just mentioned, coupled with the fact that Jito does not appear to have any token unlocks until December 11, 2024, add significant momentum to Jito’s resurgence as a core Solana ecosystem asset.

If its restaking narrative catches on — especially given the success Pendle has had with EigenLayer in recent months — Jito stands to benefit greatly and broadly incorporate Solana into another dominant narrative of this cycle.

Solana Future Expectations

As we head deeper into April, it’s clear that a large airdrop stimulus and potential narrative realignment could catalyze strong performance for Solana and the Solana ecosystem.

In less than a week, two airdrops have generated approximately $3 billion in proceeds for the network, with more to come in the coming weeks. The potential around Zeus and Jito, driven by their connection to mainstream narratives, expands the scope of value and attention Solana can capture.

Overall, with the BTC halving just around the corner and ETH’s restaking summer just around the corner, these projects are likely to attract and retain significant capital to the Solana ecosystem.

However, as April approaches, the true measure of success, especially as the network faces congestion challenges, will be based on its ability to sustain and capitalize on this momentum, rather than just attract it.