Connect with us

Market

Meme Coin Frenzy Highlights Solana dApp Limitations

Published

on


Shortly before assuming the presidency, Donald Trump launched his own meme coin on Solana. Melania Trump followed suit a day later. Solana faced major congestion issues as millions of users flooded the network to trade the tokens.

In a conversation with BeInCrypto, Chris Chung, CEO of Solana swap platform Titan, said that the bottlenecks stemmed from decentralized applications (dApps) instead of the blockchain itself. The event proved that Solana was ready for mainstream adoption. 

TRUMP and MELANIA Break the Crypto Market

Only 48 hours away from taking over the United States presidency, Donald Trump announced the launch of a TRUMP meme coin on his official X and Truth Social accounts.

Within a day of the meme coin’s launch on the Solana network, TRUMP reached a market capitalization of over $14.5 billion and a trading volume of more than $26 billion. 

TRUMP Meme Coin Market Cap Evolution Since Launch. Source: CoinGecko.
TRUMP Meme Coin Market Cap Since Launch. Source: CoinGecko.

Taking note of the success of her husband’s meme coin, Melania Trump launched her own MELANIA coin a day before Trump’s inauguration. 

Shortly after launch, the MELANIA’s market cap exceeded $5 billion. This rapid and sharp spike caused the TRUMP token to drop by $7.5 billion within ten minutes.

It also shook performance across the Solana network. 

Users Report Congestion on Solana Amid Increased Traffic

Given the unexpected launch of these presidential tokens, the Solana ecosystem saw a surge in transaction levels as users scrambled to engage in trading. Soon enough, reports of congestion and failed transactions surged across various platforms.

“During the TRUMP launch, the entire Solana ecosystem handled it flawlessly. There‬‭ were no issues with the block production nor network congestion then, partly due to‬‭ the meme coin launching at night in North America and uncertainty whether it was‬‭ real or not. As liquidity was disbursed throughout the network, there were instances‬‭ of price discrepancies as new pools were added. The issues came when MELANIA launched. With the precedent of TRUMP,‬‭ extremely large numbers of traders started either rotating into the new token or‬‭ moved to sell TRUMP with record-breaking volumes,” Chung told BeInCrypto. 

Though the unexpected traffic certainly tested Solana’s infrastructure, Chung emphasized that the bottlenecks could be traced back to the decentralized applications (dApps) handling the transaction volumes. 

On the day of the MELANIA coin launch, Phantom, a leading wallet provider on Solana, took to social media to inform the public that it was experiencing a strain on its infrastructure. 

“We’re currently experiencing a massive surge of 8,000,000+ requests per minute. While we work to stabilize our platform, transactions may have trouble going through on the first try,” the X post read. 

Meanwhile, Jito Labs, a key infrastructure provider for the Solana network, reported that its Block Engine API was experiencing “severe degradation” due to the overwhelming volume of transactions. 

Most validators on the Solana network use services like Jito Labs, designed to help transactions execute faster. Amid the MELANIA launch, the provider’s degraded performance caused priority fees to go up for the base chain.

“This in itself is the intended mechanism in order to prioritize‭ higher value transactions; however, some applications experienced issues as their‬‭ max gas fee was no longer high enough for their users’ transactions to land. In‬‭ addition, the heightened traffic also caused some critical APIs to go down as their‬‭ services were overwhelmed, which led to some disruptions in the market,” Chung explained. 

The increased market demand also hindered the effectiveness of arbitrage bots, which typically help keep prices at bay. 

Arbitrage Bots Fail to Stabilize Prices

Arbitrage bots are automated trading programs that play a crucial role in maintaining price stability across cryptocurrency markets. 

These bots help ensure prices remain aligned and efficient by identifying and exploiting price discrepancies between exchanges. However, these programs struggled to do their jobs during the increased congestion period following the MELANIA coin launch. 

“‬‭During the market disruption and congestion, many arbitrage bots were not able to‬‭ land their own transactions which caused vast discrepancies in prices on certain‬‭ pools. In particular, we saw some of Titan’s users be able to find pools that allowed‬‭ them to buy SOL for $150 while the market price was $250. This resulted in many‬‭ more transactions being submitted to try to take advantage of these arbitrage‬‭ opportunities, thus causing even more congestion,” Chung said.

In response to the increased trading volumes, the Solana blockchain suffered.

The Solana Network Shows Resilience

The significant surge in trading volume on the Solana network, which reached a record high of $10 billion in 24 hours, inevitably placed considerable strain on the ecosystem. 

While this high volume of activity resulted in some performance challenges, Chung highlighted that the Solana blockchain remained operational throughout the period. 

The event demonstrated the network’s resilience by continuing to process transactions and maintain network stability despite the reduced performance of Solana-based dApps. 

“‬‭In fact, the launches were well handled by the blockchain itself. The priority fee‬‭ mechanism worked as intended, and it was mainly dApps that were having trouble‬‭ keeping up. It just shows that now is the time for applications and ecosystem‬‭ participants to upgrade and evolve to be able to handle the future amount of traffic‬‭ that everyone believes is possible,” Chung said.

Solana has a history of network outages caused by sudden surges in transaction volume, such as those caused by meme coin launches or high trading activity. In 2022, the network experienced up to 14 outages.

However, as the network took proactive steps to increase scalability, these outages became less frequent. The last time Solana experienced a network shutdown was in February 2024. 

For Chung, the fact that Solana did not experience an outage after the TRUMP and MELANIA coin launches is indicative that the network is ready for mass adoption.

“With the learnings from the weekend, I believe that Solana is extremely well‬‭ positioned for a massive increase in user activity as the blockchain itself kept‬‭ processing transactions under load and increased priority fees as expected,” Chung said. 

However, dApps must prepare themselves for when this becomes a reality.

Decentralized Applications Struggle to Keep Pace

For Chung, the main reason Solana users experienced so many issues in trading the presidential meme coins was the inability of dApps to facilitate transactions.

“Many dApps had issues where they had set the max gas fee to a certain pre-set‬‭ number, so when the gas fees went above this ceiling, the users on these dApps had‬‭ issues landing transactions as their gas fees were now too low. This then caused‬‭ users to spam the network even more in an attempt to land a transaction on-chain,” he explained.

While on-chain dApps face fewer obstacles that hinder their ability to handle high transaction volumes, those that rely on external servers face scalability issues.

“dApps, such as aggregators, that rely on their own servers for‬‭ their products have to ensure that they can handle the projected increase in volume‬‭ and volatility. This means that extra capacity to handle far more requests and‬‭ upgrades to dynamically scale depending on user demand will be important going‬‭ forward, because Solana is likely to see more and more trading activity as it gains‬‭ mainstream appeal,” Chung added. 

Though the launch of the TRUMP and MELANIA coins was unprecedented, as cryptocurrency adoption continues to rise, such events will likely reappear. As a response, decentralized applications that facilitate network transactions must be prepared accordingly. 

Strengthening dApp Infrastructure for Future Growth

To avoid repeating similar scenarios in the future, dApps need to revisit their core infrastructure and ensure that it can effectively sustain intense traffic. 

“DApps have to plan for their operations to work in worst-case scenarios where‬‭ multiple components can fail in the pipeline. This means operating with the‬‭ assumption that the only way to send transactions would be through priority fees and‬‭ to have reliable backups for critical infrastructure. Although this may mean an‬‭ increase in expenditure, it is imperative that applications be able to function 24/7 for‬‭ their users as the blockchain does not stop. In addition, rigorous mechanisms to‬‭ protect their users have to be enabled if congestion leads to a distortion of‬‭ information,” Chung said. 

These service providers will also need to consider that, as Solana adoption continues to grow, the traffic experienced last week will likely be greater in future scenarios.

“Many dApps had set‬‭ artificial limits assuming that these would not be breached and external services‬‭ would keep functioning, but meme coin frenzy showed us a glimpse of‬‭ what mainstream adoption of cryptocurrencies would look like. To truly build‬‭ applications where billions can be onboarded, critical infrastructure has to have the‬‭ ability to keep running,” Chung added.

In the meantime, the Solana network has already laid out the next steps it will take to handle increasingly larger transactions. 

Firedancer: A Key Innovation for Solana’s Future Growth

Jump Crypto, a Web3 infrastructure developer, has built a new third-party validator client software for the Solana blockchain for the past two years.

Developed independently from the original Solana Lab’s validator client, Firedancer offers enhanced network resilience by minimizing the risk of widespread outages. By sharing virtually no code, issues within one client will not impact the other. Additionally, Firedancer aims to improve Solana’s transaction processing capabilities significantly. 

While Firedancer currently only operates on the Solana testnet, it is expected to launch on the mainnet sometime this year. 

“The most eagerly anticipated upgrade of Solana would be the Firedancer client that‬‭ is set to be released with massive improvements to the amount of transactions per‬‭ second that the network will be able to handle. It promises to process up to 1 million‬‭ transactions a second – far more than traditional payment networks. Visa, for‬‭ example, handles just 65,000 TPS at peak capacity. This is just the next step to‬‭ making Solana ready for mass adoption,” Chung emphasized.

The launch of the TRUMP and MELANIA coins on the Solana blockchain highlights the growing appeal of the Solana ecosystem within the cryptocurrency market. 

Developments like Firedancer will further equip Solana to handle similar events in the future, raising its potential as a preferred platform for individuals and entities looking to engage with cryptocurrencies. 

Meanwhile, dApps must ensure they are ready before that moment arrives. 

Disclaimer

Following the Trust Project guidelines, this feature article presents opinions and perspectives from industry experts or individuals. BeInCrypto is dedicated to transparent reporting, but the views expressed in this article do not necessarily reflect those of BeInCrypto or its staff. Readers should verify information independently and consult with a professional before making decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.



Source link

Market

Ethereum Holders Buy Heavily as Price Nears October 2023 Levels

Published

on


Ethereum has experienced a challenging month and a half, with its price nearing a 17-month low at $1,802 at the time of writing. Despite this ongoing downtrend, which nearly sent ETH into a bear market, key investors have remained optimistic.

As Ethereum approaches these significant levels, many market participants believe that a price rebound could be on the horizon.

Ethereum Investors Capitalize On Low Prices

Ethereum’s supply on exchanges has dropped to a six-month low, indicating that investors are increasingly holding their assets off the market. This drop in exchange supply is often seen as a bullish sign because it suggests that long-term holders (LTHs) are accumulating more ETH at these low price levels, anticipating future price appreciation.

These investors are not willing to sell, demonstrating strong conviction in Ethereum’s long-term value. The decrease in exchange balances also indicates less short-term trading activity. This suggests that many investors are waiting for the price to rebound before making any moves.

Ethereum Supply On Exchanges
Ethereum Supply On Exchanges. Source: Glassnode

Over the past month, Ethereum’s Liveliness indicator has declined, signaling that the selling pressure is weakening. Liveliness measures the activity of long-term holders, and a decline generally points to accumulation rather than selling. 

This drop reflects the growing sentiment among Ethereum’s long-term investors, who are increasing their holdings and expecting the price to recover in the future. The decline in Liveliness suggests that many are confident in Ethereum’s fundamentals and are less concerned about short-term fluctuations.

This accumulation phase suggests that Ethereum’s market sentiment may be shifting. The confidence of LTHs—who hold significant influence over the asset’s price—could lead to a strong upward momentum once the market conditions improve. 

Ethereum Liveliness
Ethereum Liveliness. Source: Glassnode

ETH Price Needs A Nudge

Ethereum is currently trading at $1,802, just below the resistance level of $1,862. The price has been stuck under this barrier for six weeks, continuing the downtrend that has defined much of the recent price action. However, if Ethereum can break above $1,862, it could signal the end of the downtrend and the start of a price recovery.

Given the current market sentiment and accumulation by key holders, it is possible that Ethereum will continue to gain upward momentum. If Ethereum successfully breaks through the $1,862 resistance, it could move toward the $2,000 mark, regaining some of the losses from the previous weeks. 

Ethereum Price Analysis
Ethereum Price Analysis. Source: TradingView

On the other hand, should the bearish sentiment intensify, Ethereum’s price may dip further toward its 17-month low of $1,745. Failure to secure support at this level could lead to even greater losses. This could extend the recent downtrend and leave many investors exposed to a prolonged bearish market.

Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.



Source link

Continue Reading

Market

PENDLE Token Outperforms BTC and ETH with a 10% Rally

Published

on


PENDLE has surged by 10% in the past 24 hours, making it the market’s top gainer during this period. The altcoin has even outperformed major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).

With buying activity still underway, the PENDLE token is poised to extend its uptrend in the short term. 

PENDLE Soars 43% After March Lows

PENDLE cratered to a seven-month low of $1.81 on March 11. As sellers got exhausted, the token’s buyers regained dominance and drove a rally. Trading at $3.24 at press time, PENDLE’s value has since climbed 43%. 

The double-digit surge in the altcoin’s price has pushed it above the Leading Spans A and B of its Ichimoku Cloud indicator. They now form dynamic support levels below PENDLE’s price at $2.73 and $2.80, respectively. 

PENDLE Ichimoku Cloud.
PENDLE Ichimoku Cloud. Source: TradingView

The Ichimoku Cloud tracks the momentum of an asset’s market trends and identifies potential support/resistance levels. When an asset trades above the leading spans A and B of this indicator, its price is in a strong bullish trend. The area above the Cloud is considered a “bullish zone,” indicating that market sentiment is positive, with PENDLE buyers in control. 

This pattern suggests that the token’s price could continue to rise, with the Cloud acting as a support level if prices pull back.

In addition, PENDLE currently trades above its Super Trend indicator, confirming the likelihood of extended gains. 

PENDLE Super Trend Line.
PENDLE Super Trend Line. Source: TradingView

The Super Trend indicator tracks the direction and strength of an asset’s price trend. It is displayed as a line on the price chart, changing color to signify the trend: green for an uptrend and red for a downtrend.

If an asset’s price is above this line, it signals bullish momentum in the market. In this scenario, this line represents a support level that will prevent the price from any significant dips. For PENDLE, this is formed at $2.34. 

PENDLE Holds Above Key Trendline

Since its rally began on March 11, PENDLE has traded above an ascending trendline. This pattern forms when a series of higher lows connect, indicating that the price of an asset is consistently rising over time. 

It represents a bullish trend, showing that PENDLE demand exceeds supply, with buyers pushing prices higher. 

This trendline acts as a support level. With the token’s price bouncing off the trendline, it signals that the asset is in an uptrend and likely to continue. In this scenario, PENDLE could rally to $3.60.

PENDLE Price Analysis.
PENDLE Price Analysis. Source: TradingView

However, if selloffs commence, the PENDLE token could lose some of its recent gains and fall to $3.06.

Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.



Source link

Continue Reading

Market

Will the SEC Approve Grayscale’s Solana ETF?

Published

on


Grayscale has submitted a registration statement with the SEC to convert its Grayscale Solana Trust (GSOL) into an ETF listed on NYSE Arca. 

Despite the filing, prediction markets remain unconvinced about the chances of approval.

Is a Solana ETF Approval Still Unlikely for Q2?

On Polymarket, odds for a Solana ETF approval in the second quarter of 2025 stand at just 23%. Broader expectations for any 2025 approval are at 83%, down from 92% earlier this year.

The decline reflects regulatory delays. In March, the SEC extended review timelines for several ETF applications tied to Solana, XRP, and other altcoins. 

solana etf odds polymarket
Polymarket Odds on a Solana ETF Approval by July 31. Source: Polymarket

This pattern suggests the agency may be holding off on decisions until a permanent chair takes over. Mark Uyeda, currently serving as interim chair, has not signaled a shift in stance.

Paul Atkins, Trump’s nominee to lead the agency, appeared before the Senate last week. Lawmakers questioned his involvement in crypto-related businesses, adding further uncertainty around future approvals.

Grayscale’s latest filing excludes staking, which could speed up the review process. The SEC has previously objected to staking features in ETF proposals. 

When spot Ethereum ETFs moved forward last year, Grayscale, Fidelity, and Ark Invest/21Shares all removed staking components to align with the SEC’s expectations at the time.

Under Gary Gensler’s leadership, the SEC expressed concern that proof-of-stake protocols could fall under securities law. Asset managers adjusted their applications accordingly to move forward.

Following approvals for spot Bitcoin and Ethereum ETFs, several firms aim to expand their offerings to include other cryptocurrencies. They plan to offer access through traditional brokerage accounts without requiring direct asset custody.

Solana remains a strong contender due to its growing futures market in the US and a more favorable regulatory environment. Analysts view it as one of the next likely approvals if the SEC opens the door to more altcoin ETFs.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.



Source link

Continue Reading

Trending

Copyright © 2024 coin2049.io