The Solana Coin: Value, Longevity, Rival Coins, and More
Published October 31, 2022.
Where many blockchains are struggling, Solana shines. The blockchain is able to offer faster transactions at lower costs. For instance, when Solana's 60,000 TPS is compared to Ethereum's 30 TPS, it's evident that Solana is far superior. It's no wonder that Solana has attracted a dedicated user base.
Due to the blockchain's continued efficiency and stability, its native token SOLANA (SOL), has remained to be a potentially strong long-term investment. However, recent occurrences have caused a downward trend in SOL’s price—presenting an opportunity for investors.
What Is the Solana Coin?
Solana (SOL) is the native currency of the Solana blockchain, and according to Forbes, it's among the top 10 cryptocurrencies by market cap.
The token has two main functions. Firstly, as a utility token, it's used to pay transaction fees for peer-to-peer payments (P2P), and to engage with smart contracts. Secondly, as a staking token, it's used in the network's proof-of-stake (PoS) consensus mechanism, which enables token holders to be validators of the network.
It effectively serves these functions thanks to a limitless supply of tokens. However, half of the SOL paid in transaction fees is burned by the platform every year to maintain its yearly inflation rate.
Value of the Solana Coin
In 2020, when it was first offered for sale, one unit of SOL cost $0.77. At the time of writing, its price has increased by roughly 3,674.03%, reaching $29.06. SOL's price surged to $260 in 2021 as non-fungible coins (NFTs) gained popularity—and Solana provided NFTs at lower pricing and fewer fees.
As mentioned, it's one of the top 10 digital assets in terms of market cap, joining the likes of Ether (ETH), Bitcoin (BTC), Tether (USDT), Binance Coin (BNB), XRP (XRP), Binance USD (BUSD), Cardano (ADA), and Dogecoin (DOGE).
SOL’s value hinges on the fact that it has all the characteristics of a good currency: growing significantly in a short period of time; remaining stable despite challenges such as the pandemic; having a more advanced blockchain technology (a hybrid of PoS and proof-of-history) when compared to other networks, as well as faster speeds and lower transaction costs.
Longevity of the Solana Coin
Solana is often called the “Ethereum Killer” thanks to its success and ability to bounce back despite recent crypto losses. Like other networks, Solana is a layer one network that utilizes PoS, but with quick processing times and low transaction fees.
However, it all comes with a price. One of the main complaints about the blockchain is how centralized it is. The Solana Foundation asserts that they're actively striving to increase the network's decentralization with over 2,000 nodes validating blocks every 400 milliseconds to counteract this.
A stability issue also arises in light of the fact that Solana has had seven power outages since its inception in 2020, five of which occurred in 2022. Given that it's presently the only blockchain to experience significant outages, which materially affect its performance, this raises concerns about its long-term viability. Just last September, Solana was down for about 18 hours.
Nevertheless, there are still many who believe that SOL will overcome these challenges.
» Which protocols are built on Solana's blockchain? Learn more about Orca—the Solana-based DEX
Which Coins Rival the Solana Coin?
These five currencies continue to pose serious competition to Sol:
1. Ethereum (ETH)
Both run smart contracts that enable the utilization of applications like decentralized finance (DeFi) and NFTs. While both employ a PoS consensus technique, Solana is superior since it also incorporates proof-of-history.
Solana also has a considerable edge over Ethereum in transaction processing speed and transaction fees. Solana can process 60,000 TPS for $0.00025/ transaction, while Ethereum handles 15 TPS at $0.5289 per transaction.
» What about the Ethereum merger? Find out what Ethereum's PoS transfer means for the world of crypto
2. Cardano (ADA)
Cardano is also known as the “Ethereum Killer” and is similar to Solana in many ways. Both employ smart contracts, have lower transaction times and speeds, and both have enjoyed a cumulative rise in the crypto market. In 2021, Solana overtook Cardano in the top 5 cryptos.
3. Near Protocol (NEAR)
Near and Solana feature comparable blockchain architectures, utilize the same programming language, and were established by companies in the same area.
Both of their native coins secure their networks through PoS consensus and provide holders governance privileges. The NEAR token, however, has other uses. It’s used to pay for data storage, and 30% of network transaction fees are earned by smart contract developers to build dApps.
Despite this, SOL outperforms NEAR. SOL's market worth is $9.5 billion, whereas NEAR's is $2.3 billion.
4. Polkadot (DOT)
Polkadot is one of the biggest and most popular blockchains in the industry. Solana still remains faster in terms of network speed as Polkadot can only validate 1,000 TPS. However, where Polkdaot shines is in its sustainability and interoperability.
5. Avalanche (AVAX)
Solana and Avalanche are both doing significant network upgrades to ease congestion and boost stability. Both also offer incentives to their respective coin holders to stake them for rewards.
Solana outperforms Avalanche in terms of transaction speed and fees. Avalanche can only handle 4,500 TPS. The hefty transaction prices are another common user complaint.
Is SOL for You?
SOL has been having trouble lately. A hack this year resulted in $100 million stolen and impacted 7,767 wallets. Major power outages pose another challenge to the platform.
This had caused price estimates to vary widely among analysts. According to PricePrediction's SOL price projection, the cost may average $34.26 in 2022 and $661.07 in 2030. But WalletInvestor predicts that the coin will fall to $3.40 in a year. Additionally, it's predicted to reach $1 at the beginning of 2027.
Keep in mind that cryptocurrency markets are incredibly volatile, making it challenging to anticipate a coin's price, whether it's for a few hours or for years. As a result, forecasters who use algorithms and analysts both have the potential and the tendency to misinterpret the future.
» Curious about other coins? Explore the Algorand coin's performance