Solana (SOL) price rises as airdrops attract new users to the network

SOL price has rallied more than 50% this month as new projects conduct airdrops on the Solana blockchain and high Ethereum fees push investors to seek cheaper alternatives.

Over the past six months, blockchain projects that have issued token airdrops have reemerged. Most notably, the airdrops of MEME and Uniswap's UNI will be remembered, as recipients were rewarded with gains ranging from $20,000 to $600,000 simply for holding the tokens.

One Ethereum competitor that has seen numerous projects launch with airdrops in the past three weeks is Solana, an open-source project that focuses on utilizing blockchain technology to provide decentralized finance (DeFi) solutions.

While Solana isn’t explicitly making a concerted effort to launch these projects, the protocol’s main decentralized exchange, Serum, was responsible for the recent COPE airdrop, which distributed 2,000 tokens to users who participated in the joint DeFi hackathon held by Solana and Serum.

After the airdrop, COPE eventually listed on Serum for $0.50 on March 30, and the price of the token surged to a high of $5.43 on April 11, rewarding holders with $10,860.

SOL/USDT 4-hour chart. Source: TradingView

The success of the COPE airdrop prompted a series of token launches and airdrops with similar-sounding names — including HOPE, ROPE and KOPE — whose launches on the Solana blockchain have coincided with a 55% rise in the price of SOL since the start of April.

Airdrops on the network may have played a small role in the recent price appreciation due to users needing SOL to receive airdropped tokens, but this is not possible to ascertain based on the available data.

Interactions on the Solana blockchain, including the addition of new tokens to Solana's Sollet wallet, require small amounts of SOL to complete the contract executions. Thus, users rushing to sign up for airdrops before they filled up would have needed to purchase SOL and fund their wallets in order to create new addresses for the airdropped tokens.

Analysts expect the airdrop trend to continue

For those worried that they missed out or that "airdrop season" is over, a recent tweet from Solana's Twitter feed suggests that the Solana ecosystem is just getting started, meaning the likelihood of future airdrops remains high.

New users are the lifeblood of successful blockchain networks, and the airdrops continue to be one of the most utilized methods for drawing attention to fledgling projects and sapping liquidity from one protocol to another.

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Publication date: 
04/12/2021 - 01:05
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The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.