In 2017, Anatoly Yakovenko addressed the question of how blockchains are getting faster. The later CEO wrote his answer in the white paper by Solana, which requires transactions to be time-stamped to process them independently of blocks. Today, seven years later, an entire company and foundation is behind the high-speed blockchain, which is said to process over 50,000 transactions per second (currently around 3,000 – 5,000 tps) and charges gas fees of less than a thousandth of a US dollar per transaction.
This characteristic helped Solana to be among the top 10 projects in the crypto market with the SOL token in the last bull market. The entire ecosystem includes hundreds of projects, including the well-known move-to-earn game StepN. Last but not least, Meta Group opened up Solana NFTs to its Instagram and Facebook users, and Google Cloud unveiled a collaboration with Solana. The first version of the first Solana cell phone SAGA, which contains some blockchain features, has also been available since 2023.
What Solana fights with
But with all the successes, Solana had to take a few setbacks in the past year. On the one hand, Solana – like many other projects – is struggling with the current market situation, which generally keeps the interest in buying cryptocurrencies in check. In 2022, the network was also the victim of multiple hacks. In addition, a lawsuit was filed for securities violations and the close relationship with the crypto exchange FTX and Alameda Research continues to burden the ecosystem to this day. With the latter FTX bankruptcy, many a critic found his opinion confirmed that the network was increasingly centralized by individual investors.
Last but not least, the in-house “curse” weighs heavily on Solana: it is the numerous network failures that run like a red thread through history. Is that the cost Solana pays to offer low-cost transactions? It is clear that explaining a problem is not enough. Accordingly, Solana plans to rehabilitate the core of the mainnet in 2023 with further upgrades and to set up a second validator network in case of an emergency. Perhaps this workaround could prevent Solana from taking the network offline in the future. Because this type of security precaution does not necessarily have to remain part of a cursed centralization flaw.
Conclusion: The long-term bet
Solana is recognized as a highly scalable and cost-effective network, backed by strong collaborations outside of the industry. The strategy of fast network synchronization worked in the last bull market, so that Solana has positioned itself among the top 10 projects close to Ethereum despite some setbacks. But Solana cannot rest on her laurels. As Ethereum works on more scaling solutions, Solana needs to get its outages under control. Because at the latest in the next bull market, low gas fees could ensure Solana renewed market share if users are increasingly looking for alternative trading venues in the DeFi and NFT market. In the end it remains a long-term bet.
