Popular cryptocurrencies expert Lark Davis, a seasoned investor in digital assets, listed the most influential catalysts behind the eye-watering rally of Solana.
Technology and ecosystem
According to Lark Davis in a tweetstorm, the upsurge of the Solana price is driven by both fundamentals and sentiment. To start with, the expert claims that Solana technology is more powerful than that of its rival Ethereum.
Solana has far more impressive throughput and negligible fees, Mr. Davis adds. Also, SOL can scale without Layer 2 solutions unlike Ethereum.
Then, SOL managed to attract builders from both the DeFi and NFT segments. Almost every top-tier Ethereum DeFi protocol has its own Solana-based copycat.
The GameFi explosion on SOL may be the next step in this mania.
Institutional money is coming to Solana
The Solana ecosystem garnered a lot of attention from VCs of all types. Since June 2021, a whopping $314 million in funding has been supported by Andreessen Horowitz. With many funds invested in Solana-based products.
Some of them even launched dedicated funding programs to bootstrap the ecosystem. SOL-based projects are completing multi-million-dollar rounds here and there. For example, DeFi Cyclos raised $2.1 million to bring a new type of automated market-maker to Solana.
Some important bullet points
- SOL is a fully functional blockchain with a transaction throughput of 65,000 transactions per second (TPS). Besides, the transactions costs are dirt cheap on SOL. On the other hand, Ethereum can process only 15 TPS with costs shooting with high network activity.
- Ethereum achieves higher scalability taking help from multiple Layer-2 scaling solutions. On the other hand, SOL scales without the need for any Layer-2 platforms.
- Amid the growing NFT craze, SOL is becoming an attractive platform for NFT projects. Although most of the SOL NFTs are just copy-paste versions of the Ethereum NFTs.
- SOL also has a token burning mechanism that burns a percentage of the transaction fee making it deflationary over time. Ethereum has just implemented its token burning mechanism with the EIP-1559 protocol during the London hardfork last month.
