Solana cryptocurrency: revived from the ashes and aiming for leadership
Solana has undoubtedly become one of the brightest, most discussed and most controversial projects in the crypto industry: some prophesied its imminent collapse due to frequent network problems, while others believed that this blockchain would become one of the leading decentralized platforms and even displace Ethereum.
A brief history of Solana
The Solana blockchain platform was launched in March 2020 and initially stood out for its high performance and record low transaction costs, which earned it the name "Ethereum killer".
The Solana platform belongs to the third-generation blockchains along with the following:
The critical difference between Solana, Ethereum, and other previous-generation networks is the Proof-of-Stake (PoS) consensus support.
Solana has become one of the fastest-growing networks due to its developed ecosystem and strong marketing strategy. If in January 2021, the project's capitalisation was only $100 million, by August, it already exceeded $75.6 billion. In just eight months, this figure has grown about 750 times.
At its peak in November 2021, SOL token capitalisation reached $75.6 billion, making Solana the 4th largest token in the CoinMarketCap ranking after Bitcoin, Ethereum and Binance Coin. The number of blocked assets (TVL) also showed a staggering growth, from $148 million in March to $10bn in November 2021 however, after all these achievements came the most challenging year, 2022, for Solana due to, among other things, a protracted cryptowinter.
In just a month after the Terra crash, the price of the SOL cryptocurrency collapsed by more than 3 times, and the TVL protocol fell by more than 2 times. Despite an already bearish market and a significant drop in the prices of almost all cryptocurrencies, the situation with Solana was exacerbated by the collapse of the FTX exchange, one of the largest investors in SOL.
On 1 July 2022, a class action lawsuit was filed against Solana. The Solana Labs team was accused of selling unregistered securities and misleading investors about the total circulating supply of the SOL cryptocurrency. By the end of 2022, the price of the SOL cryptocurrency had collapsed to $11 — nearly 96% relative to its high of $260. However, since the beginning of 2023, the cryptocurrency has started to recover and has shown rapid growth comparable to many other cryptocurrencies — even Bitcoin and Ethereum.
Interesting facts about Solana
The Solana Mobile team, a Solana Labs subsidiary, released their own Android-based Solana Saga smartphone with decentralized applications (DApps) pre-installed on it. However, the smartphone has not been popular with users: only 2,500 units have been sold since its release in April 2023.
Another fact: Solana was the fastest blockchain at launch, surpassing Visa and Mastercard payment systems. Incidentally, in September 2023, Visa announced a partnership with Solana to make payments in USDC stablecoins. In addition to this, Solana Labs has also started partnering with merchant acquirers Worldpay and Nuvei. Through these partnerships, users can pay for purchases with USDC tokens anywhere in the world where terminals of these acquirers are installed.
Also in 2023, the Solana team launched Backpack Exchange, a crypto exchange and NFT wallet extension based on its blockchain. The trading platform has received a licence from the Dubai Virtual Asset Regulatory Authority (VARA) to provide cryptocurrency services.
Solana's problems
Since its launch, the developers positioned Solana as one of the world's fastest blockchains, capable of processing up to 65,000 transactions per second, but in reality, things turned out to be not so smooth. One of the main problems with the Solana blockchain was the frequent shutdown of the network for several hours, each of which led to a drop in the value of the SOL cryptocurrency: users feared that the network had stopped working or the team had committed a scam.
For example, in September 2021, the network was suspended three times, and in January 2022 — as many as 9 times in one month. On 14 September, the network was shut down for 17 hours, a record high, and nearly caused the network to branch out. As a result, Solana became one of the most volatile blockchain networks. Ultimately, the developers solved the problem with uptime: since March 2023, the Solana network has never been suspended.
Project outlook
Despite the many problems that led to a severe collapse of indicators, Solana could withstand and remains in high positions. Solana now ranks 6th in capitalization, behind Bitcoin, Ethereum, Tether, Binance Coin and Ripple, and 5th in TVL behind Ethereum, Tron, BNB Smart Chain and Arbitrum.
Since the beginning of 2023, the price of the SOL cryptocurrency has grown almost 7 times from $9.9 to $68.5, and the TVL protocol has more than quadrupled from $210 million to $899 million.
Given such rapid growth, Solana has every chance to become one of the leaders among blockchains in terms of aggregate performance. For example, investment company VanEck believes Solana will become one of the top three blockchains in capitalization and TVL.
Another factor in favour of the growth of the Solana ecosystem is the support of major partners and investors such as Chainlink, Serum, Radium and many others. In June 2021, despite the high price of SOL, the team sold $314 million worth of native cryptocurrency to significant funds A16z and Polychain Capital.
