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Solana’s native coin SOL has had a monumental run throughout 2021, surging from around $1.5 at the beginning of the year in January to its current market price of approximately $150, according to data from CoinGecko.
While SOL hit an all-time-high (ATH) value of $213 in September, things could just be beginning for Solana if its rapid adoption among different crypto ecosystems is anything to go by.
In this article, we will discuss why Solana could still hit a new ATH value in Q4 2021 despite its monstrous run during the year.
In a nutshell, we will look at three major reasons that could propel SOL to new heights during the remaining three months of the year. These are, technical superiority, flourishing DeFi ecosystem, and the booming NFT landscape.
Unlike the majority of the so-called Ethereum killers that fade into irrelevance after a brief period under the spotlight, Solana has managed to come the closest to threaten Ethereum’s virtual monopoly over the smart contracts space.
For the uninitiated, Solana is a decentralized, highly-scalable, low-latency blockchain that allows developers to build decentralized applications (dApps) on top of it. Compared to Ethereum’s 15tps, Solana offers a whopping 65,000tps speed which is further slated to increase to as much as 100,000tps in the coming months.
Solana’s consensus algorithm differs from those of other blockchains in that it leverages the Proof-of-History (PoH) mechanism that promises to increase scalability by orders of magnitude without compromising the network’s security.
Solana also eclipses Ethereum in terms of network fees which, at the time of writing, stands around 0.000005 SOL or a tiny $0.001.
While the Solana mainnet is currently still in beta, it does not take anything away from the network’s rising adoption.
Users, however, must be cautious of the beta nature of the network as was evident during the recent 17-hour long outage of the Solana network. The outage sparked debates about the centralization of the Solana network while the team assured it would conduct a thorough post-mortem of the issue and ensure the same does not repeat in the future.
According to data from DeFi data tracker DeFi Llama, the total value locked (TVL) of crypto-assets in the Solana DeFi space is about $12 billion.
For comparison, the TVL of other Ethereum competitors such as Fantom, Avalanche, and Terra is $5 billion, $5.66 billion, and $7.76 billion, respectively.
The aforementioned data suggests Solana has a clear lead when it comes to developing a flourishing DeFi landscape outside the Ethereum ecosystem.
The steep surge in the Solana DeFi space’s TVL could be largely attributed to the blockchain’s technical efficiency, coupled with the innovative and robust nature of projects that are only possible to execute on a scalable blockchain.
For instance, consider the example of Serum DEX, a decentralized exchange built on Solana that, unlike the majority of automated market makers such as Uniswap, SushiSwap, and others, uses an orderbook to execute trades with greater liquidity and efficiency. This is possible because Solana is able to handle a large number of transactions at any given time with minimal latency.
Today, Serum holds a TVL of $1.88 billion with a market cap to TVL ratio of 0.52, suggesting the protocol is still undervalued in terms of its total reported market cap.
In addition to Serum, there are other DeFi protocols such as Raydium (RAY) and Orca (ORCA), both of which have witnessed increased interest from DeFi users as was detailed in the previous post here.
Should the Solana DeFi landscape continue to follow its current upward trajectory, it won’t be long before it starts challenging the Ethereum DeFi space that currently sits at a $140 billion valuation.
The story of Solana’s NFT landscape is pretty similar to that of DeFi.
Due to Solana’s cheap transaction fees, retail users with thin capital at their disposal are able to mint their own non-fungible tokens (NFTs) without having to worry about paying exorbitant minting fees, as is the case with Ethereum-based NFTs.
A flurry of successful NFT marketplaces have popped up on Solana in recent times such as Solanart, Magic Eden, and others that are doing transactions in millions of dollars every day amid the NFT frenzy.
Further, of late, the Solana NFT landscape has been able to shed off its ‘Ethereum copy-paste’ tag due to innovative NFT projects such as Solana Monkey Business, Thugs DAO, Galactic Geckos, and others.
If anything, the recent high-profile launch of the FTX NFT Marketplace will give further exposure to Solana NFTs to retail users who will now be able to purchase the same via their credit cards.
It won’t be a stretch to say that should the Solana NFT ecosystem continue to attract more users, it could rival the Ethereum NFT space and its so-called blue chip NFTs such as CryptoPunks, Bored Ape Yacht Club, and others.