Efficiency! Created almost three years ago, the Solana blockchain is used by hundreds of projects: decentralized finance, NFTs, cryptocurrencies, etc. –, seduced by the speed of the platform and its low commissions. Like Ethereum, Solana has given birth to a digital currency, the SOL, which closes a delicate year 2022.
Recall that Queen Elizabeth II called it ahorrible year a 1992 marked by drama and scandal within the British royal family.
Solana may be using this term as his own, as the past few months have been turbulent for the blockchain, amidst platform failures and security alerts. However, the adventure had begun auspiciously. The promises of a faster and cheaper blockchain than Ethereum are appealing to entrepreneurs and decentralized finance companies looking to enter the NFT market.
L’Initial Coin Offering (ICO) is a success. The 25 million euros in Solana tokens (or SOL, the diminutive associated with the cryptocurrency) issued to finance the project are finding buyers. However, the use of the cryptocurrency remains reserved until 2021, before experiencing a spectacular surge that sees the price go from €1.50 in January to almost €250 in November! A great return for the investors who had subscribed to the ICO at the price of 0.22 euros!
A discount platform
To compete with Ethereum, Binance Smart Chain and Tron, the most popular blockchains, already firmly established, Solana had to play side by side. And claim some competitive advantages. Its designers, Anatoly Yakovenko, Greg Fitzgerald, Raj Gokal and Eric Williams, immediately bet on an instrument that is more durable and less expensive to use than their rivals.
To reduce transaction fees and process more transactions, Solana uses the fastest method of validating transactions (called proof of stake) and combines it with a number of technologies to speed up the validation process.
Result, since its launch, Solana is capable of processing up to 60,000 operations per second while Ethereum does not exceed 30 operations per second. This performance significantly reduces computing power requirements and costs. Solana can therefore charge lower fees than its competitors. And to present SOL as a “green” cryptocurrency since it is estimated that each transaction made on the blockchain consumes no more energy than sending two emails… and almost 4 million times less than on Ethereum!
Three years were enough to make Solana one of the most loved blockchains by financial companies and NFT players. Careful observer of DeFi applications (decentralized financeread below), website DefiLlama ranked Solana 4th in the industry based on the indicator Total value blocked (TVL), which rates the amounts invested in projects using this infrastructure, at $2.7 billion.
let the storm pass
Since then, blockchain has experienced a major security scare that appears to have dampened industry enthusiasm. By the end of October, Solana had dropped to 8th place in the ranking, with a TVL of less than one billion euros, far behind Ethereum (32 billion), a solid leader, and Binance Smart Chain, its distant second (6 billion).
Showcase of the Solana ecosystem, SOL has not escaped the turmoil either, suffering the setbacks of the blockchain as well as a grim economic situation for cryptocurrencies since the beginning of the year.
As a result, the price collapsed by 80% and the capitalization melted by 40 billion euros in eleven months, reminding investors in passing that cryptocurrencies are not father’s investments!
Under the sun
Finding a catchy name for a project isn’t easy. When Anatoly Yakovenko had the idea of creating a blockchain faster than Ethereum and Bitcoin, he didn’t look for it long: it would be Solana, named after the California city where he was then, Solana Beach.
The introduction of Solana took place from March 16 to 24, 2020, just a few days after the cryptocurrency market collapsed following the Covid-19 epidemic. Despite these challenging circumstances, the ICO (Initial Coin Offering) raised $25 million. A success.
He knows the music
In the summer of 2021, Lollapalooza, a major music festival organized in Chicago, chooses the Solana blockchain to offer a collectible poster in the form of an NFT (a digital certificate that guarantees the authenticity of a file or a product).
Solana Labs, the company behind the Solana blockchain, is about to launch a secure mobile phone designed to host Web3 technologies, the secure internet. Called Solana Saga, the device will integrate a payment solution, a decentralized application store and a cryptocurrency wallet.
CLASSES (1): €31.50
ASSESSMENT: 11.2 billion euros.
TREND (2) : -79%
(1) As of 10/27/2022;
(2) From 01/01 to 27/10/2022.
Did you know ?
The denomination decentralized finance, or decentralized finance in French, refers to financial applications that use blockchains rather than private management and control systems, such as banks, to record and authenticate transactions. Each transaction is based on a smart contracts, a tamper-proof computer file which contains the details of the transaction and which can be automatically processed by the blockchain.
Stock market analysis by the editorial staff (1)
Solana has firmly established itself among the top 10 digital currencies, both by capitalization and by trading volumes. Its price has been most affected by the market downturn observed since the beginning of the year compared to bitcoin or ethereum, the two flagship cryptocurrencies, recording a decline of almost 80%.
We have to see the impact of the technical problems encountered by the blockchain, but also the effect of the attacks suffered in recent months. In August, hackers exploited a security breach and emptied 8,000 accounts for a sum of around 8 million euros.
Our opinion : The bearish trend of Solana is expected to continue until the beginning of 2023 with a return to its minimum price of 26 euros. However, a rebound could occur in the first half of the year, especially if technology stocks, which have been severely penalized on the markets since the beginning of the year, were to rally.
(1) Investing in digital assets carries the risk of total or partial loss of capital.