Why Are Solana NFTs Booming? It’s About Liquidity

BY Lorepunk

November 30, 2023

As Solana NFTs reap the benefit of a SOL boom, with over $1 million yesterday in inflows to Solana from Ethereum, the Magic Eden marketplace—known as the premier marketplace for Solana NFTs—is rolling out a wallet that they say will offer seamless transitions between Ether, Bitcoin, Solana, and Polygon.

Available as a Chrome extension in beta—sign ups are open for the waitlist—the wallet is a natural step for Magic Eden, which has also seen strong recent performance in non-Solana tokens, with Ordinal trading comprising nearly two-thirds of their volume for the first three weeks in November.

This new wallet arrives on the heels of a big uptick across the board for Solana NFT projects on Magic Eden, with Mad Lads up over 60% in the last 24 hours as of this writing. Other Solana winners include new pixel-art PFPs Quekz—up over 120% in the last day—and conceptual art collectibles LILY by Lotus have 10xed. Okay, Bears, Solana Monkey Business, Degenerate Ape Academy, and other collectibles on SOL round out the top.

What’s causing this upsurge? At a zoomed-out level, Solana has been shaking off the weight of doubt caused by major FTX exposure to the token. As global macroeconomic conditions tend away from more interest rate hikes by central banks and the anticipation for Bitcoin and Ether spot ETFs builds, investors on every level may be more open to risk.

“Thinking about crypto as a currency, when there are inflows into a token, holders typically find ways to spend those tokens as currency,” one analyst told us. “And Solana is seeing major inflows right now. The Mayan Finance [Solana] bridge saw over $1M in inflows from ETH yesterday and over $4M in the past week. So, it seems ETH-natives are at least partially driving this Solana NFT run,” he said.

Today’s Magic Eden front page

One economics-minded Punk, Fireblocks’ Sergio Silva, has been jumping into Solana NFTs recently. For him, liquidity with a new appetite for risk can find Solana NFTs tempting, as they offer a cultural flex as well as an investment, with lower entry cost than many ETH NFTs.

“I would say that with the recent rally in SOL, just like we saw with ETH back in early 2021, liquidity flows out from the risk curve into NFTs—which play dual roles, both as trophies but also “harder” assets—in that supply for existing collections is limited. Layer on top of this the fact that the ETH NFT market has been range-bound, and you get a new wave of liquidity flowing into Solana assets, especially considering the top collections there are trading at much lower USD valuations than on Ethereum,” he told nft now.

One of the leading Solana artists, an anonymous creator known as degen poet, agrees; to him, moving past FTX, and better infrastructure have helped.

“People are bullish on Solana. The FTX crash took 90% off the SOL price. SOL rebuilt everything that was once under the FTX wing better, like improved order books. My biggest gripe against SOL was it was going down due to bot activity. SOL solved this with priority fees & has not had an issue since,” he said in a written interview.

To degen poet Solana NFTs have never been so ripe for discovery by canny buyers. “Solana NFTs were always as good as ETH NFTs, but the blockchain didn’t have a bullish outlook or good reputation. As that shifts, Solana NFTs become an obvious winner due to less than a penny transaction happening in less than a second,” he said.

As a creator of beautiful typewriter-art poems, he is also hopeful that the inflows will benefit Solana artists. “PFPs were hit first. They are designed for pumping and dumping. Mallow Art (a 1/1 market) has seen a 60% increase in new users. In my opinion, [traders] aren’t really buying “art” yet, but they will. [Art] is typically after PFPs in NFT cycles,” he said.

Dive Deep

Features & Guides