Bitcoin has been trading above USD 45,000 for the last few days and seems to be in the consolidation state. The altseason has just started and some alts have hit their all-time highs. Solana is one of them and it really surprised the market. The market capitalization of Solana has doubled in the last two weeks and presently the price is heading towards 80$. Solana, a top 10 cryptocurrency as per marketcap now, has broken all key resistance levels and is going through a new bullish price discovery phase. What worked for Solana?
Solana was conceptualised in 2017 and it collected $20M funding through a private sale in 2019. The mainnet was launched in 2020 and many prominent projects joined the ecosystem. The blockchain started to create a nice buzz with 600+ active validators and the smart contract capability was launched very quickly. Solana offers a transaction throughput of 50,000 - 65,000 TPS which is excellent for many blockchain applications. Although many industry leaders criticised the decentralization scope of Solana due to the hardware requirement of running a validator node, the project continued to grow due to its unique scalability. Solana uses proof-of-stake (PoS) as its consensus model but it also uses proof-of-history (PoH) which solves many issues of a distributed ledger. NFT and DeFi or decentralized finance are the hottest use cases of blockchain technology nowadays. Solana too is riding the tide.
DeFi on Solana is attracting new investors. The transaction cost on Solana is approximately $0.00001 and thus it is really economic to swap on this blockchain. In May 2021, TVL (total value locked) on Solana reached USD 1.6b but it went down after the market crash. Presently, Solana TVL is at its ATH of USD 2.1b. Raydium is the most popular AMM based DEX on Solana and RAY, the native token of Raydium, got listed on Binance some days ago. Raydum dominates 41%+ TVL of Solana and it has attracted high liquidity inflow in the last week.
Chart from defillama - Solana TVL growth
Mango Markets, A DEX on Solana, raised USD 70m in a token sale some days back. It is a very nascent project but the investors rushed to buy the native token of the platform. Generally, DeFi projects hit the headlines for grabbing a few million-dollar seed funding but the retail investors could participate along with some notable VCs in the mammoth fund-raising round of Mango Markets. Mango Markets will offer spot trading, perpetual futures and lending-borrowing. It will fetch liquidity from its own liquidity pools and Serum, a popular DEX on Solana.
Solana based project Saber raised USD 7.7m from Chamath Palihapitiya’s Social Capital, Jump Capital, and others some week back in a seed funding round. Saber is a cross-chain exchange for swapping stablecoins and wrapped tokens. Saber AMM based DEX is operational now and it has attracted amazing TVL growth. Saber got a competitive edge due to the number of assets it supports. At present, the DEX has a TVL of USD 319m and it is the number three DeFi platform of Solana.
Solana Wormhole was launched in the second week of this month. It is a bidirectional, decentralized ERC-20 ⇄ SPL token bridge between Ethereum and Solana. Their official blog post says, “Wormhole allows existing projects, platforms, and communities to move tokenized assets seamlessly across blockchains to benefit from Solana’s high speed and low cost.” The interoperability protocol will help to move any kind of tokens from other blockchains to Solana and vice versa. Wormhole is supporting Binance Smart Chain and Terra also besides Ethereum as of now.
There has been a surge of NFT projects on Solana very recently. Degen Ape Academy is a new project which has created tremendous hype. 10,000 apes were sold in a few minutes of the launch. Currently, the ape arts are selling like hotcakes on Solanart and people are spending astronomical money for the degen apes with rare attributes. NFT mania is being considered as a big catalyst for pushing the price of SOL upward.
Solana seems to be fit for conducting DeFi activities. The low transaction fee is a big positive point for the Ethereum competitor. Lack of liquidity of non-native assets is a big issue for all blockchains other than Ethereum but Wormhole can bring many non-native assets to Solana through a decentralized route. Popular centralized exchange FTX is backing Solana by offering easy transfer of different assets through a centralized gateway and FTX can give Solana what Binance did to Binance Smart Chain. The price rally of Solana can continue with the recent NFT craze as people need to buy SOL to do any kind of trading activity. The buying pressure on SOL is clearly visible but there are some immediate risks of overvaluation. Solana can continue its record-breaking rally with strong technical fundamentals and PR if the bears don't enter the market now.
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