Why is Solana Going Up?
Why is Solana Going up?
After the FTX scandal in November 2022, the cryptocurrency that was most affected after FTX was Solana. Solana crashed from being above $100 to below $20. However, in the latest trend, Solana is one of the best-performing cryptocurrencies. Currently, SOL is trading above $50.
Apart from outperforming the overall crypto market, Solana’s yearly performance with respect to Cardano has been highly positive. Why has Solana been beating Cardano this year?
Let us look at two verifiable metrics
DeFi TVL: On January 1st, 2023, Solana was $210M, Cardano was $49M
NFT Sales: In January 2023, Solana’s NFT sales were $158M, Cardano’s was at $14M
Whatever the other metrics and arguments, it was clear in January that Solana was severely undervalued (perhaps even fairly on account of multiple security breaches and the FTX Scandal). But with most of those issues now in the past, Solana had to catch up with Cardano. Particularly so because even today, Solana has 5x the NFT sales of Cardano and 2x the TVL.
So the question is – Is Cardano overvalued or Is Solana undervalued?
In the last 30 days, Cardano rose 53% which is much lower than Solana but much higher than Meme Coins like Dogecoin and Shiba Inu. So clearly the argument is not that Cardano is overvalued. VanEck and numerous social media influencers have already argued that Solana will rise higher. Apart from Jerome Powell [Federal Reserve Chairman], there are no reasons Solana can’t rise higher even if there are temporary setbacks in the next few weeks and months.
Why is Solana Going up? 2022 Summary
In 2022, Solana faced significant challenges, including network outages and the collapse of FTX, resulting in a sharp drop in SOL market capitalization and Total Value Locked (TVL). Also, nearly 8,000 wallets on Solana suffered losses exceeding $5.2 million. Solana has also faced performance issues, prompting validators to consider a network restart. Independent rating agency DeFi Safety ranked Solana as the second-worst blockchain based on technical criteria. The year concluded with grim prospects for 2023.
Why is Solana Going up in 2023?
2023 brought a remarkable resurgence.
Firstly, compared to 7 security breaches in 2022, there was just 1 in 2023 (Crowdwisdom360 estimates)
Secondly, concerns over a massive sell-off post-FTX’s liquidation of a $1.16 billion Solana holding proved less severe than feared. FTX staking 5.5 million SOL, valued at $122 million, bolstered investor confidence. The network’s resilience was highlighted by its 1,893 active validators and 925 RPC nodes.
Thirdly, the integration of stablecoin settlement capabilities on the Solana blockchain by Visa, in collaboration with Worldpay and Nuvei, marked a significant advancement in cross-border money movement. More than that, it reinforced faith and Trust in Solana amongst Investors.
Other Partnerships include those with Dubai Free Zone and AWS
Vaneck Report was released a few weeks ago, here is the summary
VanEck applied a standardized valuation framework to Solana, aiming at a token valuation of $335 in their 2030 Base scenario.
- The revenue breakdown for Solana in 2030 under the base scenario includes -Total revenue of $8,869 million with transactions contributing $2,882 million, Finance, Banking, and Payments contributing $984 million, Metaverse, Social and Gaming contributing $1,339 million, Infrastructure contributing $560 million, and MEV – Block Builder Revenue contributing $5,987 million.
- In another perspective, if Solana replicates Ethereum’s distribution of revenues from payments and associated services, payments would only represent around 5% of Solana’s revenues. When extrapolated, the total revenue opportunity for Solana could range between $13 billion and $66 billion, compared to a base case for Ethereum revenues of $50 billion by 2030. Moreover, the structure of Solana might be ideal for onboarding over 1 billion users of public blockchains projected by 2030