Solana, a smart-contract-compatible blockchain, hit all-time price highs in 2021. The hype around the network and its token SOL is based on the fact that it has a faster transaction time and lower fees than that of Ethereum, earning the nickname “the ETH killer.” Smartchain-compatible Layer 1’s have been in fashion but tend to be riding on Ethereum’s tailwinds. However, with a couple of key advantages over Ethereum and the growing adoption of the technology, Are you wondering, Is Solana here to stay? We think Solana could be here for the long haul.
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Is Solana Here to Stay or Just a Fad?
Solana was founded by Anatoly Yakovenko in 2017. The network was built by Solana Labs, a U.S. software company. The Solana blockchain launched its coin SOL and raised funds starting in 2017, but it truly began catching eyes in 2021 when large sums of VC money began pouring into the project.
The total supply of SOL is about half a billion and uses a mix of proof of stake (PoS) as well as the less common proof of history (PoH) consensus mechanism. This unique combination of securing the network gives the Solana network the low fees and fast transaction speed that the bulls are excited about. However, a key concern with Solana has been the network’s instability, as well as susceptibility to hacks. Thus, the use of PoS and PoH is yet to be proven a reliable structure.
The founding of Solana was very different from that of Ethereum. While Ethereum was spun up by a rag-tag group of freelance developers and crypto enthusiasts, Solana was started by a company in San Francisco. This genesis has been a big criticism of the project; with a key focus of crypto being decentralization, Solana is very much more involved in the corporate and Web2 ways of doing things. Its centralization is revealed in the structure of the company, low number of nodes operating the blockchain and the VC fundraising rounds.
Solana was launched in 2017, giving Ethereum a significant first-mover advantage. In the fast-paced crypto ecosystem, two years is a significant amount of time and is a main reason the numbers of ETH users, builders and traders far outweigh Solana’s. Solana holders received some positive news when OpenSea – the largest NFT platform in the world – began accepting SOL non-fungible tokens (NFTs) in April of this year. This feature could raise demand for the token as well drive more development on the chain.
Pros and Cons of Solana
When considering Solana’s future, a number of differentiating factors come to mind. While the SOL bulls may want to focus on the pros, the cons make it very hard for the network to scale and earn the trust of the crypto community at large.
- Fast transaction speed
- Low fees
- Smart-contract capability
- Low environmental impact
- Centralized (relative to other crypto networks)
- Susceptible to hacks
- Difficult to build on
Solana has intense competition; as noted earlier, it ranks far below the second-largest cryptocurrency in the world – Ethereum. The competition does not end there, however. A seemingly endless number of similar smart-contract-capable Layer 1 blockchains have been released. Notably is the NEAR protocol, which is similar to Solana. Like Solana, the preferred programming language for writing smart contracts on NEAR is Rust.
Possibly most threatening to Solana is the number of Ethereum Layer 2 projects being developed, such as Arbitrum and Polygon. These Layer 2s build upon the base infrastructure of Ethereum and provide cheaper and faster solutions. Layer 2s ultimately capitalize on the advantages of Ethereum (ease of use, decentralization, security) and provide faster transactions with lower fees.
How to Make Money With Solana
If you are a believer in Solana long term, one of the best ways to make money is to buy and hold the token. A good strategy to use is dollar cost averaging, in which you set a specific day weekly, bi-weekly or monthly to purchase an amount of SOL. This strategy helps investors avoid buying the top and helps prevent emotional trades.
If you are looking to earn rewards on your SOL, you can look into staking for interest. Through a cryptocurrency wallet such as Phantom or Solflare, you can freeze SOL to help authenticate the Solana network. APYs vary for staking SOL, with smaller validators typically offering higher returns because there is more risk in these pools.
How to buy Solana
Solana is available on most trading platforms, including SoFi Technologies Inc. (NASDAQ: SOFI) and Coinbase Global Inc. (NASDAQ: COIN). The token is also easily exchangeable on decentralized exchanges (DEXes). Some popular DEXes to check out include SushiSwap, PancakeSwap and UniSwap.
Is Solana Here to Stay?
It is yet to be seen if Solana has any staying power; however, the recent adoption of Solana NFTs is great news for the community. The network is fast and cheap for users to transact, but recent hacks and network issues have caused serious doubts about the project. For Solana to have any chance of staying around, an increase in decentralization, stabilization of the network and rapid adoption must take place.
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Is Solana here to stay?
Based on the current circumstances, some people believe that Solana is here to stay.
Is Solana stable?
Solana has experienced some disruptions, but it is working on stabilizisng the platform.
Can you exchange Solana?
You can easily exchange Solana on decentralized exchanges.
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