Does Solana have a future? Project overview
Solana became very popular on the 2021 bull run, but the collapse of its main investors, FTX and Alameda Research, left many wondering if it now has a bright future.
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After the famous Sam Bankman-Fried fiasco, Solana lost about 75% of its value and many developers. Well-known NFT collections began leaving its network, and some projects from the ecosystem announced their closure.
However, at the beginning of the year, the cryptocurrency showed good growth, which began to return faith in it. Given its current situation, we decided to review this cryptocurrency thoroughly and see if Solana can rebound.
What is Solana?
Solana is a first-level blockchain that runs on the Proof-of-Stake consensus algorithm and uses a unique Proof-of-History transaction ordering method. It distinguishes the project from others and makes transactions fast and cheap. Another Solana blockchain's significant advantage is its throughput. The network can process about 60 thousand transactions per second, much more than Ethereum. The block time is also impressive – only 0.4 seconds.
However, blockchain has its drawbacks. The network often fails to withstand the load and suspends its work. This happened four times in 2022 alone. Also, a negative moment in the history of Solana – the massive Slope wallet hack that occurred in August last year. More than 8,000 users were affected, and the total loss amounted to about $8 million. Blockchain has shown that it is not as reliable and secure as Ethereum, which is why it got a lot of backlash.
Who created Solana?
The founders of the Solana cryptocurrency are Ukrainian developer Anatoly Yakovenko, Qualcomm engineer Greg Fitzgerald, and former heads of medical tech companies Raj Gokal and Eric Williams. The project was first proposed in 2017 but launched only in 2020. It was not the best time to launch a new project (pandemic, bear market), but Solana was able to achieve massive success, quickly getting into the top rankings of Coinmarketcap.
What is SOL?
SOL is Solana's native token used to pay transaction fees. It can be staked to keep the network running.
SOL has an unlimited supply, meaning it will increase until it stops existing. This negative factor causes a gradual depreciation of coins (inflation). There are currently over 370 million tokens in circulation.
You can buy SOL on many centralized exchanges, including WhiteBit, OKX, Binance, Coinbase, Bybit, Kucoin, Huobi, and others.
Current situation
Today, Solana is going through hard times. The TVL indicator (the total value of the assets staked in smart contracts) has decreased by more than 70% over the year. The Serum decentralized platform shut down, and the Raydium AMM protocol suffered from a hacker attack. Famous NFT collections such as DeGods and Y00ts also left the Solana ecosystem.
However, Vitalik Buterin, the Ethereum founder, decided to support the blockchain. He posted on Twitter that Solana has an earnest and smart developer community. The successful launch of the BONK meme token, which significantly increased activity in the Solana network, added to the positive. Thanks to this news and a slight turnaround in the cryptocurrency market, the SOL coin was able to more than double. However, the price is still 90% below its ATH.
Competitors
It’s worth noting that Solana began to have serious competitors in the form of Aptos and Sui blockchains. Moreover, both are positioned as “Solana killers” and are distinguished by a programming language that is simpler for developers. Aptos is already out on the Mainnet and has made a lot of noise by launching a generous airdrop. Sui is still in the testing phase but already shows great promise.
Project prospects
After Solana lost its main investors, its prospects were grim. But this does not mean that Solana will completely disappear from the market. Blockchain continues to evolve, and its team is working on improvements.
However, it must be considered that Solana has now strong competitors with a better chance of success. At least since their reputation has not yet been tarnished. Therefore, investing in the Solana cryptocurrency is not the best idea, and the project's “golden” days are likely gone.
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