While almost the entire crypto market suffered major losses in the course of a flash crash on Tuesday, one crypto currency is visibly unimpressed – Solana (SOL). The high-flyer of the last few weeks continues its run unimpressed. In the meantime, SOL also saw its share price decline, but this was followed by a jump to over $ 200.
In the meantime, Solana has also overtaken Ripple (XRP) in the ranking of the largest cryptocurrencies by market capitalization. Reason enough to review the last few weeks and take a look at the future course of SOL.
Solana overtakes Ripple
If you look at the SOL / USD chart, it is noticeable that Solana has recorded an increase in value of almost 30 percent in the last 24 hours alone. After large parts of the crypto market collapsed as a result of a flash crash on Tuesday, Solana recovered from the losses at an above-average rate. At the time of going to press, the price was already just under US $ 210. On Tuesday, the price fell to just over $ 130. Less than 24 hours later, SOL hit a new all-time high.
SOL share price development over the last 30 days. Source: Coinmarketcap
The great success of Solana catapulted the project to 6th place among the largest cryptocurrencies by market capitalization. With a market capitalization of around $ 59 billion, Ripple has left it behind and is already looking at the roughly $ 5 billion heavier Binance Coin (BNB). With this, Solana underscores its reputation as one of the fastest growing cryptocurrencies. But why is Solana suddenly so successful?
Solana: Success was inevitable
The concept behind Solana is not new. But the project already offers functions and use cases that many other platforms have been talking about for years. Cardano (ADA) is currently working on the implementation of smart contracts and Ethereum (ETH) will still need some time until Ethereum 2.0 is fully set up. Solana is already a comprehensive smart contract platform enjoying an increasing number of projects and developers.
New DeFi applications and NFT projects are constantly seeing the light of day on the Solana blockchain. The Cyclos liquidity pool, which brought in 2.1 million US dollars in capital, recently caused a stir. Together with DEX Serum, a SOL-based liquidity pool was created that attracts investors with above-average returns. But not only the projects attract investors, the technology itself is also one of the decisive advantages that speak for Solana.
A combination of a Proof of Stake (PoS) and a Proof of History (PoH) ensures cheap and fast transactions. Secretly, quietly and quietly, Solana eyed herself at a high-flyer in the crypto world. You could almost say that success was inevitable. A whole ecosystem is gradually developing around Solana. For example, the Solana SafeCoin project claims the title of the most efficient network of all crypto projects. SafeCoin is currently working on a decentralized exchange called SafeSwap.
Starting with this study, at least we’re here to be conservative: pic.twitter.com/4OQwcQEtbN
– SafeCoin (@SafeCoins) September 9, 2021
What’s next for Solana?
The current success of Solana is very similar to the beginnings of Ethereum. And in fact, SOL could also develop into a serious competitor for Ethereum. While ETH is still struggling with expensive and slow transactions, developers are likely to increasingly focus on alternatives like Solana. Current data from DeFi market observers are showing the first signs of this. Defillama, for example, reports a significant increase in the “Total Locked Value”, ie the capital tied up on Solana.
Current DeFi data on tied capital on Solana. Source: defillama
With all the justified euphoria, Solana is still a little light compared to Ethereum and other smart contract platforms. Established projects such as Cardano, Ethereum or Polkadot have many times more projects and partners. Solana’s market capitalization is also still a long way from Ethereum’s $ 415 billion. The current price hike is therefore likely to be based on speculation rather than sustainable growth.
Conclusion: Solana delights investors, long-term success is not yet in sight
Solana has pulled through in the last few weeks. At the beginning of the year, SOL was still under $ 2. It’s currently over $ 200. Due to the price rally, the project is now one of the largest crypto currencies. And the success is no coincidence.
Solana’s technical background is likely one of the success factors. Solana already offers what other projects have been promising for years. However, investors should keep in mind that the current run is only a snapshot. In the long term, SOL has to prove that the hype is justified. Nevertheless, it turns out that Ethereum, Cardano and Co are by no means inviolable and that new projects can put the established platforms under great pressure.