Solana is proving to be the go-to investment instrument for many retail traders and investors. The price of SOL has hit multiple records the past week, recently blowing past its record high. The price of SOL is now $173.70, after a remarkable 24-hour increase of 20.05%.
But what is really fuelling the buzz around the cryptocurrency as it enters price discovery mode? Renowned YouTuber and crypto investor Lark Davis has looked underneath the hood of the Solana ecosystem, weighing in on some of the catalysts driving its parabolic rally.
The Newest Ethereum Competitor
Solana has stolen the crypto spotlight in the last month or so. The seventh-largest cryptocurrency by market cap has essentially decoupled from the rest of the crypto market as the SOL token enjoys a stellar bull rally.
In a lengthy Twitter thread on Sept.7, Davis argued that Solana’s price has grown exponentially owing to both robust fundamental factors and sentiment. For starters, the pundit stated that Solana’s architecture makes it more powerful than that of its direct competitor Ethereum.
Previously, the high demand for Ethereum caused network congestion, subsequently resulting in exorbitant transaction fees. These shortcomings have created great opportunities for Layer 2 solutions, sharding, and now Layer 1 blockchains like Solana, looking to be more scalable than Ethereum.
According to Davis, Solana has a throughput of 65,000 transactions per second and ultra-low transaction fees. In contrast, Ethereum currently executes only 15 transactions per second for very high fees. Though Ethereum has Layer 2 scaling solutions, Solana scales presently even without L2s.
Solana has attracted an influx of developers from the decentralized finance (DeFi) and Non-fungible token (NFTs) spaces who aim to benefit from the blockchain’s fast block times and negligible transaction fees. The network utilizes the Rust programming language which many builders are familiar with. As such, Solana has welcomed many promising projects such as Metaplex, Serum, Synthetify, Parrot, Pyth, among others, in recent months.
Yesterday, FTX CEO Sam Bankman-Fried revealed that Solana had been integrated into the platform’s NFT marketplace. This means that NFT creators would be able to mint and trade custom digital arts cross-chain on Solana and Ethereum. It should be noted that FXT, which is the third-largest spot and second-largest derivatives exchange, strongly backs the Solana ecosystem.
Institutional Money Is Starting To Take A Keen Interest In Solana
Another big contributor towards Solana’s vast growth is the attention from institutional investors and venture capitalists. Earlier in June this year, for instance, Solana closed a $314.15 million private token sale round led by Andreessen Horowitz, Alameda Research, Polychain Capital, and others. The project said that the funds would be used to promote the development of dApps and DeFi projects.
Late last month, Osprey Funds announced that it was preparing to launch a private Solana Trust for its rich investors in response to the surging institutional appetite in the SOL token.
“That being said, Solana has its work cut out for it. Competition is strong. And Solana now needs to translate its current price success into being more than the flavor of the season,” Davis summarized.