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Bitcoin and Ethereum have been dealing with massive scalability issues, and Solana chief Anatoly Yakovenko is certain that Solana is the answer.
Is he right?
TLDR 📄
- Solana is built for global adoption, unlike Bitcoin and Ethereum, which are struggling with scalability issues.
- The number of active Solana addresses is rising while Bitcoin’s are dropping.
- But Solana has a history of outages, raising doubts about its reliability and safety.
- Upgrades (v. 1.14 and v. 1.14.17) are addressing the outages and improving performance.
- Solana’s short-term price outlook is uncertain, but it remains influenced by the broader market and Bitcoin’s trajectory and $15 is very likely.
- Wormhole’s plan to bring wrapped Bitcoin (wBTC) to Solana could serve as a catalyst for growth and increased attention.
Disclaimer: Not financial or investment advice. Any capital-related decisions you make are your responsibility and yours only.
“Solana can handle all of the world’s needs” 🎤
Two days ago, Bitcoin and Ethereum were bogged down with crazy traffic issues, all thanks to the rise of memecoins. It’s pretty clear they’re not quite ready for global traffic levels, right?
But Solana? That’s a different story. Anatoly Yakovenko, the guy behind it, says he can see Solana handling all the world’s needs, all on one blockchain.
And honestly, when you compare the time and money it takes to process a transaction on Bitcoin or Ethereum and the same transaction on Solana, he’s got a point.
People seem to understand this. When high traffic turned Bitcoin and Ethereum unusable in recent days, a lot of users left those chains and went to Solana. Just look at this chart: 👇🏼
Active Solana addresses are going up, while Bitcoin addresses are dropping. Coincidence? We think not.
Bitcoin lost about 291,500 active addresses, while Solana gained 103,000 – just as Bitcoin transaction times were stretching and fees were rising.
Yakovenko has a solid point, and the data backs him up. But somehow Solana hasn’t quite achieved worldwide dominance yet – partly because of those worrying outages. The good news: devs have a fix in the works.
Fixing the holes 🔨
Solana has a mixed track record. It’s had more than its share of outages, which isn’t ideal for a blockchain that’s supposed to be up and running 24/7/365. It’s kinda worrisome, right? What if the chain goes down for weeks or even months?
To be fair, Solana’s still a newcomer compared to Bitcoin and Ethereum – it launched in 2020. So some hiccups are to be expected. As long as they keep making progress, the future’s looking bright.
The devs tackled some reliability issues with the 1.14 upgrade in February 2023 and have started fixing more with v. 1.14.17, set to be completed by May 22nd. And don’t worry, you don’t need to dig through the docs to understand the technical stuff – we’ve got you covered with a simple breakdown.
Here are the main changes:
- Saving memory space: Solana validators, the computers that help run the network, can now use less memory. This means it’s cheaper and easier for them to keep the network running.
- Faster block sharing: Solana has improved the way it shares blocks (bundles of transactions) across the network. This makes it quicker and more reliable, so everyone gets transactions done faster.
- More complex transactions: Solana can now handle bigger and more complicated transactions. This is great for users who need to do more with their transactions, but they should be careful not to use up too many resources.
- Better staking experience: Solana has improved the way people can put their tokens to work and get staking rewards. This makes it easier for users to earn from their tokens, and it sets the stage for more cool features in the future.
- Estimating fees made simple: A new feature helps users figure out how much they need to pay to get transactions completed quickly. This is perfect for people who want to make the most of Solana’s fast and affordable transactions.
It’s great to see the developers working tirelessly, but the history of outages make us wonder if there’s a fundamental issue with Solana. But hey, for now, the devs are staying positive.
Now, let’s get into the part that you’ve been waiting for: SOL’s price analysis.
Price analysis 📉
SOL returned to the $19-$22 range, and we expect it to hit the lower end of $19 first; shown by our small red arrow. After that, SOL will make a critical move – breaking out upward or downward.
Let’s face it, SOL isn’t immune to the broader market’s influence. Wherever BTC goes, SOL will follow, and since Bitcoin is on track to reach $24,250, a short-term downside scenario to $15 is more likely. Of course, this could change if SOL manages to reclaim $22.
So even though there have been upgrades and positive statements, SOL’s short-term future isn’t looking too bright. Now what about the state of its ecosystem?
Solana ecosystem 🌐
Here is the one table you need to see to understand what’s happening in the world of Solana’s DeFi (decentralised finance) offerings: ⬇️
Despite the small uptick in TVL (total value locked), Solana’s overall DeFi business has lost 95% of the capital it once had. Things are looking pretty bleak.
Solana has a decent infrastructure and it’s patching the holes, but it needs a catalyst to drive capital back. One way this can happen is with the new Bitcoin bridge from Wormhole.
t.
Coming soon, everywhere. pic.twitter.com/auzzzqgzKO
— Wormhole🌪 (@wormholecrypto) May 9, 2023
Bitcoin dominates the crypto world, but it’s hard to use with other chains. The Ethereum community built a solution a long time ago by wrapping BTC into wBTC and using it as an ERC-20 token. Now there’s over $4B of BTC living on Ethereum. Wormhole is planning to do the same for Solana in hopes of bringing cash and eyeballs to the Solana ecosystem – we doubt it though.
Cryptonary’s take 🧠
Imagine a massive motorway with so many thousands of lanes there will never be a traffic jam. That motorway is Solana.
But where does it go? For now, it handles traffic between villages when it was built to be packed with the traffic of entire regions.
The roads people are using – Bitcoin and Ethereum – have queues stretching back miles. They’re the ones connecting major cities.
Solana has a big job to do as it patches up leaks and starts connecting places that people actually want to go to. They are putting in the effort, but they’ve lost the attention they enjoyed in 2021, and it will take them a while to get it back.
Capital rotation is seasonal, and right now the attention and the capital are on Ethereum and its L2s. Solana will once again have a chance to shine, but that time is not now.
For you, the Solana believer, keep the faith. Patience is your friend. As long as the devs keep shipping, Solana could rise again.
In the meantime, you can dedicate your attention toward the latest developments, updates, upgrades, and price action, which we will continue to provide here.
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