I've frequently seen Solana in recent days. It turns out that it is becoming one of the widely used blockchains. Solana has achieved an undisputed second position in the NFT market after Ethereum. The fact that many DAOs have been created on Solana is also one of the signs of adaptation. Solana also started to show itself in the play-to-earn category thanks to its low-cost transactions.
What Is The Essence of Solana?
Solana was promoted as the fastest blockchain in 2020. Indeed, transactions on Solana are fast and cost-effective.
Anatoly Yakovenko published Solana's white paper in November 2017, and the mainnet launched in March 2020. Solana uses a version of the proof of stake consensus algorithm called proof of history. Improvements on Solana are made using a programming language called Rust.
Solana gained rapid recognition in the crypto market after its price increased more than 100 times last year. Thus, it provided an excellent profit to early-stage investors. Like other popular coins from the previous year, Solana's price has also dropped by over 80%. Could the user adaptation and price decrease have made Solana a good investment alternative again?
Is Solana a Centralized Network?
Is centralization the cause of Solana's fast and low-cost operations? Initially, it was claimed that Solana would reach 50,000 TPS. Earlier this month, Anatoly Yakovenko announced that Solana's capacity is 15,000 TPS. This capacity is still impressive compared to networks like Bitcoin, Ethereum, Cardano, and Cosmos.
There are several reasons why the Solana network can achieve this capacity. First of all, Solana validators use high-cost servers. Yakovenko rationalizes this situation by stating that TI costs are halving every two years. If they don't update the server requirements, the cost of being a Solana validator will decrease over the years. Indeed, the number of Solana validators is growing steadily.
Currently, the Solana network has 2014 validators. Clusters of 150 created among these validators approve transactions on the network. Some describe Solana as a DPoS network because delegation is also possible.
In consensus algorithms, decentralization is measured by the Nakamoto coefficient. The Solana Beach explorer shows that the 30 largest validators must unite to stop the Solana network. The first 30 validators, called super minority, have 33% of the total stake. This super minority number is much lower in networks such as BSC, Polygon, and Fantom. We can say that Solana is a decentralized network, although it is well behind Bitcoin and Ethereum.
On the other hand, it is difficult to say that Solana has a widespread coin distribution. The information on Messari indicates that initial token distribution is problematic. Initially, more than half of Solana coins were owned by VCs and the Solana Foundation. We do not currently know how this distribution is.
User Adaptation
We do not have an information source showing the transaction numbers of blockchains in the crypto ecosystem. To have information on this subject, it is necessary to examine the explorers of blockchains. In this regard, it is also possible to benefit from sites such as Defillama and Dappradar.
Solana ranks sixth in total value locked(TVL) in the DEFI field. EVM networks such as Ethereum, BSC, Avalanche, and Polygon share the top positions regarding TVL and the number of applications in DEFI.
NFT marketplaces are the area where Solana is still the most ambitious. Magic Eden has recently surpassed Open Sea to become the most popular marketplace. On the other hand, Open Sea added Solana to its networks.
Solana's game platform, Gameta, rose to third place in terms of user count after Alien Worlds and Splinterlands. Solana transaction fees, which are close to zero with the support of falling crypto prices, help adaptation.
Outages and Hacks
Almost every month, an adverse event occurs on the Solana network. The majority of news about the Solana network not working for a while. Anatoly Yakovenko says in his interviews that they have conducted a comprehensive study on this subject, but he does not guarantee the result.
Last month, $5 million worth of coins were stolen from 8,000 Solana wallets. In February, the Solana Wormhole bridge was hacked, and $320 million was stolen.
I use the blockchains I will write about. I used Solana last year and was satisfied with the user experience. I have no investments in the Solana network. Today, I wanted to experience the latest state of the network by transferring Sol via Binance. Binance has suspended withdrawals from the Solana network and cited the problems in the network. I was able to make the transfer only in the afternoon. Solana provides a great user experience, but if it works :)
Conclusion
In the crypto world, I think adaptation is more important than rhetoric. Therefore, despite its weaknesses, I believe Solana is ahead of networks like XRP, Cardano, and Polkadot. I'm assuming they will minimize outages in a reasonable amount of time.
Solana has an inflation rate of 7%, and its staking yield is 6.29%. I don't know how many coins Solana foundation has and how they will affect the future Solana price.
There are many videos on Youtube about Solana's earning potential. Some say the price will increase ten times, some 50 times.
Does it make sense to invest in Solana? Since we are in the bear season, it is reasonable to invest in quality projects like Solana.
However, I have focused on coins such as Hive, Cub, and Splinterlands that investors do not appreciate enough.
Thank you for reading.
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ETH POS is already beginning to reveal cracks in certain areas, especially, centralization. I wouldn't write Solana off. I think it will absorb a large chunk of the market.
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Solana, the Ethereum Killer?
Anatoly Yakovenko hopes that it will be.
tough to say, thanks for the information.
I'll have a portfolio for Sol, Avax, IMX, Cosmos and Fantom before the bull-run. Though not sure about their weight, I'l 100% buy some each of them.
Centralised Solana is not the answer to a suddenly much more centralised Ethereum.
From an idealistic standpoint, the whole crypto industry continues to get worse.
Hive is just completely on a path of its own.
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I think it’s interesting that people are willing to stick with a blockchain going through these kinds of growing pains.
Hacks, having the chain shutdown, and no block explorers sounds crazy from my pov but maybe somethings keeping that community there.
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