Published on mei 28, 2024, 12:56 am
Image source: Fox News
```json { "TLDR": "Altcoin SOL saw a 5% price increase, reaching $171. Approval of a proposal changing burn rate raises concerns about impact on transaction order and inflation. SOL's growth slower than Ethereum due to less user activity in DApps. Unlikely for SOL to quickly surpass $190 amidst uncertainties." } ```
The Altcoin SOL saw a 5% rally in price today, but concerns arise as on-chain data questions whether Solana can surpass the $190 barrier.
Solana’s native token, SOL (SOL), surged by 5% on May 27, climbing from $161 on May 26 to $171. This increase sparked optimism among investors for further growth, especially after reaching $188.90 just days prior.
A significant contributor to SOL’s upward momentum is a proposal aimed at boosting yields for validators instead of burning tokens while network activity remains consistent.
On May 27, Solana’s validators approved the SIMD-0096 proposal, altering the burn rate on priority transactions from 50% to 0%. This adjustment directs all transaction fees to block producers starting from epoch 621 forward, with the objective of incentivizing validators to prioritize network security and efficiency over arbitrage strategies.
The proposal introduces concerns about the maximal extractable value (MEV) as validators can impact transaction processing order, potentially affecting regular users in decentralized finance (DeFi) applications.
However, some experts caution that the inflationary impact of this change could make SOL more inflationary, potentially leading to an effective annual inflation rate of approximately 9.9%.
Analysts speculate that SOL’s recent price fluctuations may be linked to reactions following the approval of an Ether (ETH) exchange-traded fund (ETF) by the SEC in the U.S., which boosted ETH prices close to its peak.
Despite differing opinions on the consequences of eliminating the burn mechanism, growth in Solana’s network usage has been sluggish compared to Ethereum and its layer-2 solutions. Data from DappRadar reveals modest growth in Solana’s decentralized application (DApps) volumes, significantly lower than Ethereum and BNB Chain.
In terms of active users, Solana has experienced declines while competitors like BNB Chain and Polygon have seen notable increases. The drop in user activity on platforms like Raydium and Magic Eden adds further insight into Solana’s current performance.
With uncertainties surrounding recent price shifts and criticism regarding inflationary changes due to burning mechanism removal, it appears unlikely for SOL to swiftly reclaim its previous high of $188.90.
This article emphasizes that it does not provide investment advice; readers are encouraged to conduct thorough research before engaging in any investment decisions related to Altcoins or other cryptocurrencies.
Original article posted by Fox News
