Why Solana?: Crypto Market Thoughts
As Solana continues to grow- here’s why I’m digging deeper.
On the 1st day of this year, Solana’s native token sat at $1.61, a far cry from crypto’s two titans, Bitcoin and Ethereum. Now, as I sit here writing this on September 12th, SOL is just over $179. Because of this, and the fact that we’re starting to see a sort of mini-ICO frenzy surrounding the Solana network(think celebrities suddenly jumping on the bandwagon), crypto’s new darling is now at the top of my mind and I’ve got a few questions.
First: what exactly are SOL’s tokenomics? What’s the simplest way in which the usage and therefore, the differentiation of the SOL token can be explained? Rather than attempt to answer that here with little research, I’d like to see what all of you think first.
Still, there are other areas that draw me towards Solana as a research path, which is why I’m penning this post!
What excites me about Solana now
Consider the fact that last year, most DeFi activity would grind to a halt when Ethereum’s gas fees became too prohibitive. If you’re not familiar with gas fees, just think, “payments in Ether, Ethereum’s native cryptourrency, to use the Ethereum network.” At one point last year, I remember it costing $64 to send $64 of Ether from one place to another and it got worse!
I’m as much an Etherean as the next open-minded Cryptopian, but I’m also a believer in a plurality of smart contract networks. More than one can and will rule for different reasons. Anyone suggesting that Ethereum will simply die out because another network is faster or vice-versa, that no other comparable network will matter once Ethereum is updated enough is too caught up in their own investments to have enough of an open mind to see differently.
It’s nothing personal.
It’s just how markets are driven.
Skin in the game rules.
Still, if you look beyond any form of maximalism, it’s easy to see a world where, for example, both Ethereum and Solana persist. Take the present time, for example, when any project can, at least temporarily, go from being Ethereum-based to Solana-based using a technical feature called the “Wormhole.” Described as a bridge from Ethereum to Solana and vice-versa, “Wormhole,” is in more of a basic sense, “a communications protocol.”
Drilling down even more, if you use the analogy of a smart contract that locks up Ether to spit out the equivalent SOL, then you’ve got the general picture. On a technical level, it gets a bit more complicated than that, but as far as I can tell now, this serves well as a general conception of how “Wormhole” works.
If that’s not enough, imagine a piece of software that changes the code of a cryptocurrency to match that of a new network, namely, Solana, or Ethereum.
DeFi has an exit door that has reportedly already proven to be able to 50,000 transactions per second, at least in a limited, testnet, environment. That, if it persists at a meaningful scale, veritably blows all other networks out of the water in terms of speed and when you add in network effects garnered(projects that have ported over), it becomes clear why the Solana has been thrust into the spotlight this year.
NFTs, in particular, now have a much more cost-effective place to be hosted, and only time will tell how many projects choose to take the plunge and go Solana instead of the steadfast Ethereum path that many still trod. With an average transaction fee that one source claims is 60,000X lower than Ethereum’s, it’s easy to see why Solana’s being heralded as “the ETH killer.”
I, however, would like to move away from that moniker and instead consider Solana as a future hotspot for consumer-grade, decentralized apps. Ethereum’s showing no signs of dying and has other use cases.
Looking Ahead
As the year goes on, expect me to delve more into Solana’s promise, even if and when SOL hits a major downturn(as most coins eventually do in these situations). Because of its’ technical promise plus the major investments being made in its’ development(see SBF), I see no reason that Solana will fall out of the spotlight any time soon. In particular, I’ll be watching NFTs and Dapps as they grow on its’ chain.
Finally, with everything that I do, I aim to spark further, deeper conversations and simply help to educate the world about the power of this little, yet powerful place many of us have now called home for years. Now, I’m moving to an even shorter format for some of my work because, honestly, we live in an age where no one has time for anything. As always, feel free to reach out to me via Twitter or Discord@AriastheRaven#0117, and stay tuned for next time! Finally, most of my free time is now being taken up with my newsletter, which is completely free and focused on how the rise of the Metaverse improves things for everyone. Sub here.
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Disclaimer: I do not aim to garner any investment for the project from my efforts and no one should make any investment decisions based on what I write. All of my content is purely educational. Do not treat this post as an inducement to buy SOL(Solana’s native coin). In a day and age where you can never tell who isn’t just shilling their personal portfolios, this has to be said. Always do your own research before you put any financial resources on the line for anything.
