11
Apr
2023

Solana Up Double Digits As Struggling Blockchain Continues Rally

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  • Solana has gained a significant price surge, outperforming the rest of the bullish market, with its SOL increasing by over 10.1% in the past day
  • Solana’s SOL on-chain staking is now supported by Singapore-based cryptocurrency exchange Crypto.com
  • While Solana has had its struggles, it is still a strong blockchain network

Solana up over 10%

Solana has gained a significant price surge, outperforming the rest of the bullish market, with its SOL increasing by over 10.1% in the past day, reaching a monthly peak of $22.50. Solana is a speedy proof-of-stake (PoS) blockchain network launched in March 2020 by Solana Labs. Developers can build out various decentralized finance (DeFi) apps and non-fungible token (NFT) projects on the network. Despite the excitement around Solana’s new Android smartphone powered by the Solana blockchain, called Saga, there are issues plaguing the blockchain.

One of the significant problems for Solana is that the NFT trading volumes have declined from around 2 million SOL weekly in January 2023 to 1 million SOL in total volumes over 30 days. Additionally, the total value locked (TVL) in DeFi applications has only slightly increased from $208 million to $294 million year-to-date, per DeFiLlama. While Solana’s fundamentals have been steady since the start of the year, with no significant improvement, Bitcoin’s psychological breakout above $30,000 has clearly sent a bullish impulse throughout the market.

Crypto.com supports Solana staking

Solana’s SOL on-chain staking is now supported by Singapore-based cryptocurrency exchange Crypto.com, allowing Solana users to earn rewards with up to 5% APR. In late March, Coinbase also announced its transition to on-chain staking for four cryptocurrency assets, including Solana. According to staking rewards, Solana ranks as the second largest staking network after Ethereum, with a staking market cap of $7,956,072,148. Solana has a staking ratio of 72.55%. The number of stakers over the last seven days currently stands at 588,976.

Vision and Saga

Solana is taking its vision to enable decentralized applications to scale to millions of users with a newly introduced “state compression” that will enable it to cost even less to build user-first Web3 projects. State compression represents a new way to store data directly on-chain that cuts down on costs by magnitudes of scale, Solana stated in a blog post. The compression-friendly data structure utilized by “state compression” allows developers to store a small bit of data on-chain and update directly in the Solana ledger, cutting data storage costs down dramatically. Helium has also announced that it will utilize the feature for compressed NFTs.

While Solana has had its struggles, it is still a strong blockchain network, and the Saga phone has the potential to help the Solana ecosystem. Saga allows users to mint their NFTs from anywhere and access the wider Solana-based ecosystem of apps and projects. Saga’s release highlights Solana’s vision to enable decentralized applications to scale to millions of users. Despite the issues plaguing Solana, the blockchain’s future remains bright with its state compression technology and potential for continued growth in the DeFi and NFT markets.

The issues with Solana

One of the main issues that Solana has faced is network congestion. As the network grew in popularity, it started experiencing slower transaction speeds and higher gas fees. This was due to the blockchain’s design, which allowed for high throughput but was not as efficient in handling a large number of validators. The network was also vulnerable to spam attacks that clogged up the system, causing delays in processing transactions and increasing gas fees.

Another issue that has plagued Solana is the lack of decentralized governance. The Solana Foundation, which oversees the development and management of the blockchain, has been accused of having too much control over the network. This centralization has caused concerns among some community members who fear that the foundation’s decisions could harm the blockchain’s long-term sustainability and decentralization.

Additionally, Solana has faced criticism for its lack of interoperability with other blockchain networks. While many blockchain projects are working towards cross-chain interoperability, Solana has been slow to adopt this trend. This has limited its ability to connect with other networks, hindering its potential to become a hub for decentralized finance and other blockchain applications.

Solana has also been hit by several controversies that have impacted its reputation. In December 2021, the network experienced a 17-hour outage, which caused many users to lose confidence in the blockchain’s reliability. The outage was due to a denial-of-service attack that overwhelmed the network’s validators, causing a halt in transaction processing. The incident raised concerns about Solana’s ability to handle large-scale attacks and maintain network uptime.

Moreover, in early 2022, Solana faced allegations of insider trading after the price of the blockchain’s native token, SOL, surged ahead of a major announcement by the Solana Foundation. The accusations prompted an investigation by the foundation, which cleared its employees of any wrongdoing, but the incident left a stain on Solana’s reputation.

Despite these challenges, Solana has been working to address these issues and improve its network. The blockchain has introduced new features such as state compression, which enables it to store data more efficiently and cost-effectively. Solana has also been focusing on improving its governance model by increasing community participation and decentralization.

Looking to the future, Solana has many exciting developments in the pipeline. The launch of the Saga phone, an Android smartphone powered by the Solana blockchain, has generated excitement in the crypto community. The phone will allow users to mint NFTs and access the Solana-based ecosystem of apps and projects. This development could boost the adoption of the Solana blockchain and increase its value.

In conclusion, while Solana has faced several challenges and controversies, the blockchain’s fast transaction processing and low fees have made it a favorite among many in the crypto community. Solana’s developers have been working to address the network’s shortcomings, and the launch of the Saga phone could be a game-changer for the blockchain’s adoption and growth. However, Solana will need to continue improving its governance model, addressing network congestion, and increasing interoperability to remain competitive in the crowded blockchain space.

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