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Solana Token seems to be unstoppable as its price is busy breaking new ATHs. As other altcoins saw a bearish trend, Solana’s native token SOL crossed the $120 mark after surging more than 20% over the past 24 hours. These recent increases appear to be fueled by interest in decentralized finance (DeFi) efforts and the cryptocurrency's development team's recent revelation of a mysterious event. On Aug. 27, the team sent posts on its social media channels promoting an event entitled "Ignition." The event was slated to take place on 31st August.
Over the weekend, Solana reached another milestone: the value of decentralized finance projects pegged on the token's blockchain crossed $3 billion for the first time, almost tripling this month alone.
While the value of the broader crypto market has remained essentially steady in the last week, Solana's price has risen by a whopping 37%, bringing the year's gains to around 70%.
Before we get into the benefits of this new program launch, let us first get a brief idea about the SOL token.
What Is Solana?
Solana is a highly functional open source project that leverages the permissionless feature of blockchain technology to create DeFi solutions. While the idea and first work on the project began in 2017, the Solana Foundation formally launched Solana in March 2020.
The Solana protocol is intended to make it easier to create decentralized apps (DApps). It intends to increase scalability by combining a proof-of-history (PoH) consensus with the blockchain's underlying proof-of-stake (PoS) consensus.
In addition, Solana is well-known in the cryptocurrency community for the blockchain's extraordinarily fast processing times. Solana's hybrid protocol greatly reduces validation times for transaction and smart contract execution. Solana has also piqued the curiosity of institutional investors because of its lightning-fast processing times.
Solana has prioritized smart contracts, which are blockchain-based programs that execute when certain circumstances are met and automate agreements so that everyone knows what will happen. They eliminate all middlemen and accelerate the process. Apart from all these reasons which add up to the bullish run of SOL tokens, the rise came primarily as a result of Solana's Ignition teaser video, which included a purple flame lighter.
What Is the Ignition Event?
Some people believe the lighter symbol represents an SOL coin burning incident. This is a strategy that Solana has used in the past. The network has already burned a certain percentage of transaction fees, but new SOL coins are being produced. The blockchain has conducted mass burns in the past to temper inflation due to the lack of a maximum supply ceiling. However, many have questioned why a unique landing page on the Solana website is required.
Is it an SOL Token Burning Event?
Solana, as a public blockchain, uses SOL to help with two main tasks: staking and transaction fees. To maintain the SOL supply limit versus its 500,000,000 SOL issuance, the protocol burns a portion of the transaction fees it collects.
On the other hand, Solana issues new tokens according to a "disinflationary inflation schedule” in which the SOL issuance rate declines over time after peaking at its greatest value. Meanwhile, according to Solana, the supply will finally settle at a “predetermined long-term inflation rate.”
However, since "Ignition" is just a one-off burn, it shouldn't get its landing page on the official Solana website. This is partly due to prior SOL burning occurrences in which the Solana team did not provide customized teasers.
The preview for Ignition also includes a message that states, "The sky's the limit." What are your plans to launch?” With a date range of August 31 to October 8, it appears to be more of a decentralized application developer or non-fungible tokens (NFT) creator event than a token burning episode.
Traders appear to have used Ignition as a stimulant to raise their SOL bids. The SOL/USD exchange rate increased 17.62% on the day of the announcement, which was on Friday.
Some Major Predictions on SOL Token Ahead of the Ignition
This news is driving investors nuts as Solana has already had a solid year in 2021. Its rise over the last few months has been practically unstoppable, and it has managed to hold on to its gains rather than reverting. Price forecasts for Solana have always been popular, but they're now more in favor. Let's take a look at how experts envision Solana's future.
Solana, according to CoinPriceForecast, is only getting started with increases. Solana is expected to reach a price of $244 by the end of the year.
One of the more upbeat forecasts comes from the Economy Forecast Agency. SOL is expected to reach a high of $335 by the end of 2021, according to the platform.
WalletInvestor is optimistic, although not as much as CoinPriceForecast. The website is asking for a price of $168 in its one-year prediction until August 2022.
Gov Capital's one-year forecast is marginally more bullish, putting SOL's price at $214 in August 2022.
The Bottom Line
While demand for blockchain games, NFT launches, and the developing Solana DeFi sector are driving SOL's demand, the announcement is the center of attention.
Many traders believe SOL is now dangerously overvalued as a result of its recent Ignition-related price gains, with many comparing the parabolic rise to Bitcoin's in 2017. Anything less than revolutionary could result in a sharp reversal of the coin. It's now up to the market to make a decision.