Solana primed for a 20x?

Disclaimer: This information presented in this article is not financial advice. What you choose to do with the information is solely your responsibility. Cryptocurrencies are unregulated and highly volatile assets, and a greater-than 100% capital loss is very probable.

Market Update

  • Bitcoin made new lows compared to that made in the 2021 summer, going as low as $26,500 in May 2022.
  • This price action signals the start of a new bear market.
  • The collapse of the UST stablecoin and the Terra layer-1 (L1) blockchain were compounding catalysts.
  • Market commentators call for a $20,000 Bitcoin, with some going as low as $10,000 and $7,500. All these scenarios are probable.
  • Given the bearish market conditions, Solana has dropped from its all-time high (ATH) of $259 to a 52-week low of about $37, and it could go lower as the bearish trend continues to play out.
  • The market conditions present an opportunity for staggered Solana entries. But take care to not catch falling knives as Bitcoin dominance increases, draining the life from altcoins.
  • Notwithstanding, Solana has shown immense growth potential.

What is Solana?

  • Solana is an L1 blockchain built for scalability, user-friendliness and cost-friendliness.
  • Market commentators consider Solona highly centralised, though the ecosystem developers refute this claim.
  • The L1 blockchain is fast, cheap to use, and piqued to be the home of NFTs, trading tools and blockchain gaming applications because of these advantages.
  • Solana is a very popular L1 blockchain and does not require a deep dive. To learn more about Solana, please refer to the Solana Documentation.

Where is the market opportunity?

  • The Solana ecosystem had over $12 billion of total value locked (TVL) at the peak of the market cycle in November 2021.
  • At the time of writing, with BTC dropping more than 50%, the ecosystem still has over $3 billion TVL.
  • Serum, the central order book system underpinning DeFi on Solana, announced a $100 million fundraise in January 2022 to expand operations.
  • Github activity continues growing by as much as 34.2% quarter-over-quarter, according to Messari research.
  • Though TVL and DeFi activities are in decline, network activities, including user growth, continue to grow.
  • Solana Pay launches, enabling merchants to accept payments in USDC.
  • Over 1,100 developers registered for the Solana Riptide hackathon.

Catalysts for further growth

Phantom wallet mobile app

  • Phantom wallet app launched on iOS and Android.
  • Excellent user experience and ease of use will draw the attention of many more retail users.
  • Network usage has grown logarithmically, with a 4,400% user increase from 40,000 in July 2021 to 1.8 million in December 2021.
  • CEO & Co-Founder of Phantom wallet, Brandon Millman, aim for 10 to 50 million users.

Magic Eden, OpenSea, Instagram & NFT growth

  • Eth still dominates NFT sales, but Solana takes the second position by sales volume — an impressive feat for a relatively new L1 chain.
  • Popular eSports platform, G2 Esport, announced a collaboration with Metaplex to offer Solana NFTs.
  • Magic Eden — Solana NFT marketplace — raised $27 million in March 2022 from Sequoia, Paradigm, Solana Ventures, etc.
  • OpenSea NFT marketplace now supports Solana NFTs and Phantom wallet.
  • Instagram integration for Solana NFTs is currently underway.

EVM compatibility via Neon

  • Most L1 projects implement Ethereum Virtual Machine (EVM) compatibility to draw value from the existing Eth ecosystem but with much lower gas fees.
  • Solana is getting EVM compatibility via NEON.
  • Neon will offer cheap gas for Ethereum applications on the Solana blockchain.
  • Neon transaction speed is about 4,500 tps, and transaction fees are about 0.000015 SOL/tx.
  • Will draw hundreds, if not thousands, of Ethereum (Solidity) developers to the Solana ecosystem.

GameFi and Move-to-earn (M2E)

  • Solana ventures announced a $150 million fund to boost GameFi in 2022.
  • Krafton, developers of PUBG announced they would develop games for the Solana blockchain.
  • Move-to-earn mobile game, STEPN, exploded onto the scene, drawing the attention of non-blockchain users.
  • STEPN has scaled its daily active users to over 74,000 since launching its public beta in December 2021.
  • More retail-drawing and easy-to-use blockchain apps will increase capital flow into the ecosystem.

Conclusion

  • Though Solana has done 100x from $0.5 to its current price of around $54, the potential to surpass its previous ATH is present.
  • My price prediction is between $500 to $1,200, but I could be wrong, and it goes to zero like Luna if a black swan event occurs.

Follow me on Twitter and Medium, and subscribe to my FREE newsletter for more forward-looking thoughts and alpha on all things Web3, NFTs and crypto.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Kel The Observer

sci-fi writer & crypto enthusiast. Follow me on Twitter @observer_kel