While new price heights are positive for investors, they present a series of challenges related to fees, transaction rates and the centralization of what is meant to be a decentralized ecosystem. Since mid-2020 institutional investors have been steadily moving into cryptocurrency and this exacerbates the problem of scalability, high transaction costs and long confirmation times on the Bitcoin and Ethereum blockchain.
Eth2 is being rolled out steadily, but it may be a while before users take advantage of many new features. This leaves the door open for other viable candidates to fill the void, and a handful of layer 2 projects are gaining traction in the decentralized financial space.
One of those projects that has caused a furore in the past 6 months is Solana (SOL). Founded by Anatoly Yakovenko and designed a team of former engineers from globally recognized companies including Intel, Dropbox and Qualcomm, Solana claims to be a censorship-resistant blockchain that provides the open infrastructure needed for global adoption.
Some experts view the project as a potential Ethereum competitor and FTX Exchange co-founder and CEO Sam Bankman-Fried threw his support behind the project when he chose it host his DeFi project called Serum.
According to Bankman-Fried, Ethereum is unable to handle the rapid growth in the decentralized financial sector and the only way to get around the scalability and transaction cost challenges is to build on other networks such as Solana.
Bankman-Fried claims he thoroughly tested more than 30 of the best blockchain projects, including Ethereum, before settling on Solana, and in the past he referred to the network’s ability to process 50,000 transactions per second.
When asked about scaling improvements with Eth2, Bankman-Fried suggested it is still insufficient, saying the crypto industry needs something that is “not only 100 times faster than Ethereum, but a million times faster than Ethereum.”
Solana token is gaining traction
Initially after listing on exchanges, SOL Token traded between $ 0.50 and $ 0.91 in April and July 2020. This was before any major property developments were announced, but on July 27, Bankman-Fried tweeted:
“Serum is built on the @solana blockchain. Solana can process 10,000 times as much as Ethereum; and it is 1,000,000 times cheaper. And unlike many side chains, Solana is a full-fledged decentralized blockchain with over 100 validators. “
Shortly after the announcement, SOL saw a noticeable increase in buying pressure as volume and price rose sharply over the next two months as the average daily volume increased from $ 1 million to $ 41 million and the token price rose to $ 4.89 .
When the DeFi bull run ended and traders took profits, SOL was not spared the carnage and the price dropped to $ 1.21 before claiming the $ 3.00 range for the past month.
Aside from existing as an efficient alternative to the Etheruem network, the Solana blockchain has followed in the footsteps of other networks that realize how integral stablecoins are to the growth of the crypto sector.
In response to the recent announcement of the OCC that banks “can use new technologies, including INVNs and related stablecoins, to perform banking permissible functions, such as payment activities,” the Solana team tweeted that the approval would also benefit SOL and the network.
The team said:
“Big news for public blockchains & stablecoins! USDC is already integrated into Solana, which is currently the only chain that can settle 50k + txns per second, with fees as low as $ 0.00001 per txn. More than $ 50,000,000 USDC-SPL is currently in circulation! “
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