2021 was undoubtedly the year of Solana and literally when 10x shocking even the most hardcore believers. But it\u2019s 2022 now and things are different so I\u2019m wondering does Solana still have 10x potential or is it bound for more pain after already dropping 80 from its all-time high. To answer this question, we got to look at three things in particular: Solana \u2018s past present and future.<\/p>\n\n\n\n
In just a minute we\u2019re going to look at all the bullish things going on in Solana land but first we got to start with a couple of problems that began in the past but still have not been resolved yet. The first is all the network issues they have faced. Call it DDoS attacks, network congestion, whatever.<\/p>\n\n\n\n
All I know is that this was not a one-time event. It\u2019s been happening ever since they launched, and I count five to ten separate incidents, depending on how you slice them without getting too deep into the details. I think a big reason why this happens is because of their network architecture. Solana optimizes for fast and cheap transactions which is great but unfortunately that allows people to spam the network. Like when there\u2019s a hot NFT mint, people create bots that spam the network with thousands of transactions to try to claim the NFTs. They can do that because gas fees are so incredibly cheap. But the problem is the network gets clogged up, validators cannot operate anymore, and everything just stops working.<\/p>\n\n\n\n
The problem got so bad that a few weeks ago, we saw Solana validators consider banning certain smart contracts to reduce spam in the network. That\u2019s definitely not the right solution because that\u2019s straight up censorship, which goes against the very core of blockchain. But I understand why they\u2019re so desperate to find a solution because whenever the network crashes it stays down for hours if not days. And that could be catastrophic for defi users if someone has defi loans on Solana they may get liquidated if they\u2019re not able to top off their loans in time.<\/p>\n\n\n\n
This isn\u2019t just some theory. It happened to Solana users during the January outage and a lot of people got wrecked for no fault of their own so that\u2019s why I think this is an existential crisis for the team to fix. I don\u2019t know what it\u2019s going to take, maybe adding a fee market or switching to a modular design. Whatever it is they have to fix this before the next bull run, or Solana will never be able to take that next step.<\/p>\n\n\n\n
The second issue that worries me is their tokenomics. Remember the chart from Messari that shows Solana having one of the worst insider concentrations out there. Close to 50 percent of their initial token supply was allocated to insiders. If we look at their token supply curve, we see that the biggest unlocks are behind us. Which means that insiders have had an opportunity to dump their tokens.<\/p>\n\n\n\n
Surprisingly, the price of SOL did not dump when those unlocks happened. Most likely because the insiders in whales were benevolent and bullish. But here\u2019s the thing they got in at such a low price that they\u2019re still up like 100x, even though we dropped 80 from all-time highs. So during a prolonged bear market I expect them to take profits aggressively, which would be terrible for us holders who bought in at much higher prices.<\/p>\n\n\n\n
But I don\u2019t want to dwell on the past because this video is about Solana \u2018s future after all so let\u2019s move to the present and look at the state of Solana.<\/p>\n\n\n\n
In terms of Solana \u2018s metrics they\u2019re looking quite healthy. Solana \u2018s total value locked is sitting at over four billion dollars, even after a six-month bear period. And their number of validators has grown to over 1,700 from 1,300 at the beginning of the year. But more importantly their stake concentration has been improving steadily. This is measured by the Nakamoto coefficient and theirs has increased to 24 which means that they\u2019re more decentralized than before.<\/p>\n\n\n\n
Speaking of staking they have over 73 of their available token state, which is one of the highest compared to its peers. And lastly their developer growth has also topped the charts per the most recent electric capital developers report.<\/p>\n\n\n\n
I think a big reason why their metrics are doing so well is because their NFT scene is absolutely popping. They\u2019re second only to Ethereum in terms of sales volume and in the past 30 days. They\u2019ve done over 300 million in NFT sales. Their unique buyer\u2019s chart is also trending up and to the right.<\/p>\n\n\n\n
One explanation for this is that Solana offers low fees and fast speeds which is what the people want, but I think another explanation is that there\u2019s a lot more quality marketplaces that support Solana these days, like OpenSea and Rarible both started supporting Solana NFTs recently. Then there\u2019s Magic Eden, a Solana native marketplace that\u2019s doing quite well even FTX launched their own marketplace which supported Solana from the beginning. So with all these options out there it\u2019s no surprise that their NFT sector is still popping despite the bear market.<\/p>\n\n\n\n
It\u2019s not only NFTs though, but Solana has also seen a bunch of high-profile integrations across the board like Coinbase started listing Solana tokens. For the first time ever in January Brave decided to integrate Solana into their browser allowing their 42 million users to access Solana Dapps seamlessly. Phantom, the popular browser wallet for Solana is doing amazing as well. They surpassed 2 million users recently and reached a one-billion-dollar valuation after their most recent fundraise.<\/p>\n\n\n\n
So, Coinbase, Brave, Phantom. All of these are helping grow the activity and adoption across the Solana ecosystem. But remember the point of this article is to analyze how Solana will perform this year. So far, we\u2019ve looked at the past and present, and the only thing missing is the future.<\/p>\n\n\n\n
Specifically, there are three things in particular that I\u2019m looking out for this year. First, are all the hot projects launching in their ecosystem like StepN. It\u2019s a fascinating project where you can earn tokens by running or walking every day. They\u2019ve been the talk of town on crypto twitter and their token pumped a lot in March and April. They\u2019ve single-handedly kicked off a hype wave for move to earn projects. And I for one am curious if they can sustain their initial success.<\/p>\n\n\n\n
Another project I\u2019m excited about is Neon EVM. They are building an Ethereum compatible environment on Solana so people can use their favorite Ethereum Dapps but with a fast and cheap experience. It looks like they\u2019re only on test net right now but I\u2019m hoping that they\u2019ll launch on the Solana main net before end of year.<\/p>\n\n\n\n
These projects and other ones matter a ton because it\u2019s going to take successful apps and protocols being built on Solana in order for it to succeed in the long haul. But if we take a step back from all these individual projects, I really like Solana \u2018s broader strategy of focusing on gaming because gaming is a massive industry that fits well with blockchain in my opinion.<\/p>\n\n\n\n
The global gaming industry is expected to reach 315 billion dollars by 2027. And Solana is making a huge bet on this trend with their multi-million-dollar funds that are investing in gaming related companies.<\/p>\n\n\n\n
One partnership I really like is their partnership with Crafton, the parent company of PUBG and they\u2019re exploring NFTs for their video games. This is all quite early, but I hope that some sick games will come out of this, sooner rather than later.<\/p>\n\n\n\n
The second thing I\u2019m looking out for is all the partnerships in and around the Solana ecosystem. Courtesy of FTX, we all know that Sam Bankman-Fried and his FTX empire have long been a supporter of Solana. All their masterful partnership and marketing moves also benefit Solana.<\/p>\n\n\n\n
For example, Coachella launched their NFTs in partnership with FTX and of course they were on Solana, and then all their sports related deals, like with the Miami Heat, Tom Brady, Stephen Curry. All of those will benefit Solana in some way because if they launch anything it will likely be on Solana.<\/p>\n\n\n\n
The third thing I\u2019m looking out for are any big upgrades or changes to the network itself. For example, Solana has long been in beta mode but eventually they have to fix their bugs and put out an official 1.0 version so that they can finally lose that beta tag. I\u2019d also like to see an on-chain governance process because right now their governance is quite centralized. Someone put out a proposal for this in mid-2021 but it hasn\u2019t been adopted or pushed forward yet. These would both be huge changes, but I think they\u2019d be beneficial for Solana. So fingers crossed that we see them both come to fruition this year.<\/p>\n\n\n\n
After taking all of these points into consideration. My final verdict is, bullish on Solana but I wouldn\u2019t hold too much SOL this year. I think they have a ton of potential with all this growth and integrations and partnerships. But we can\u2019t ignore the fact that we\u2019re in a bear market right now and because of that we have to be wary about the potential selling pressure from insiders. Keep in mind that SOL already did a 100x in 2021 so it\u2019s unlikely for them to do it again anytime soon. Maybe it can pull a 10x but I think it\u2019s more likely to drop 90 than pull a rocket ship this year.<\/p>\n","protected":false},"excerpt":{"rendered":"2021 was undoubtedly the year of Solana and literally when 10x shocking even the most hardcore believers. But…\n","protected":false},"author":1,"featured_media":2196,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16],"tags":[22],"class_list":["post-75","post","type-post","status-publish","format-standard","has-post-thumbnail","category-solana","tag-feature","cs-entry","cs-video-wrap"],"jetpack_featured_media_url":"https:\/\/liweisu.com\/en\/wp-content\/uploads\/2022\/05\/the-future-of-solana.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/posts\/75","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/comments?post=75"}],"version-history":[{"count":3,"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/posts\/75\/revisions"}],"predecessor-version":[{"id":2327,"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/posts\/75\/revisions\/2327"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/media\/2196"}],"wp:attachment":[{"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/media?parent=75"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/categories?post=75"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/liweisu.com\/en\/wp-json\/wp\/v2\/tags?post=75"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}