In the 2021 bullish crypto market, Solana has been climbing the crypto leaderboard to be in the top 10 with the market cap of over $70B at the writing time. It has dethroned multiple old-fashioned 2.0 blockchain platforms and crypto projects since it is building the most favorable environment for ideas to prosper.
Starting with only a few DeFi projects, the Solana ecosystem is now skyrocketing with hundreds of projects. This created a solid network uniting the power of the Solana community.
In this article, there is plenty of useful information about the Solana ecosystem that you need and some predictions from Coin98 Insights.
- Solana overview, the SOL token, and Roadmap.
- DeFi ecosystem on the Solana blockchain.
- Predictions and opportunities.
So let’s explore the potential of Solana!
- Solana Overview
- Solana's Roadmap & Development Progress
- The Solana Ecosystem
- Derivative DEX
- Yield Farming and Asset Management
- IDO Platform
- Predictions about Solana Ecosystem
- Investment opportunities with Solana Ecosystem
What is Solana?
Solana is a third-generation blockchain using the Proof-of-History consensus specially designed for Dapps (decentralized applications). Solana’s unique technologies can be up to 50,000 TPS (Transactions Per Second) with high security and scalability. The Solana network can practically handle a maximal bound of 710,000 TPS as more validators participate in the blockchain.
Solana has developed a blockchain with prominent technologies and innovations that make Solana outpace other competitive 3.0 blockchain platforms.
Proof of History (PoH) along with Tower BFT, Turbine technologies, and Replicator nodes provide the Solana blockchain scalability, reduced block time, and high transaction capacity.
Extremely low transaction fees, 0.000005 SOL ~ $0.00075. The Solana blockchain has the lowest transaction fee compared to other blockchain platforms such as ~$25 on Ethereum and ~$0.4 on BSC.
Lighting fast transaction speed is the core feature of the Solana blockchain since it strongly affects the experience of users. Imagine you have to wait for such a long time to complete a transaction while using other old-fashioned and limited blockchain platforms.
Programming languages Rust, C, C++ are supported on the Solana blockchain to develop smart contracts. Programs are built and deployed on the Solana Runtime forever. Users can interact with those programs by sending instructions to the network via Solana APIs. Those programming languages are so widely used that every developer has to have at least basic knowledge of them.
The Solana blockchain is backed by a supportive community of Market Makers, VCs, KOLs, and investors. Namely, it is backed by the VC Alameda Research and Sam Bankman-Fried who founded the FTX centralized exchange in the top 4 in terms of the daily trading volume.
- Ticker: SOL.
- Blockchain: Solana.
- Consensus: Proof of History (PoH).
- Consensus mechanism: Tower BFT.
- Token Type: Coin.
- Smallest unit: Lamport, 1 SOL = 10^9 Lamport.
- Max Supply: 1,000,000,000 SOL.
- Circulating Supply: 299,425,920 SOL.
- All-time high ATH: $214 (09/09/2021).
- All-time low ATL: $0.5 (11/05/2020).
- Exchanges: Binance, Huobi, Kucoin, Gate, Coinbase, and FTX etc.
- TPS: ~2,000 TPS. 50,000 - 65,000 TPS Theoretically.
- Blocktime: 400ms.
- Total Tx: 32,012,655,476 Tx.
- Avg. Tx fee: 0.000005 SOL ~ $0.00075.
- Validators: 1065.
DApps on Solana
Since the Solana mainnet, over 400 projects ranging from DeFi, Web3 applications, games/metaverses, and NFTs have been built on top of the Solana blockchain. This shows the rapid expansion of Solana in the crypto world. Developers need a favorable environment to deploy their ideas that benefit all aspects of crypto.
Solana's Roadmap & Development Progress
At this time, the Solana team published the whitepaper of the Solana blockchain. They focused on developing the infrastructure of the blockchain with multiple SDKs to support developers. Many Testnets on a single node, multi-node, and multi-cloud were conducted by the team. The foundation of the blockchain was being developed.
In March 2020, the Solana mainnet was stably released for developers to deploy their ideas. The DeFi wave in the Solana ecosystem was spurring the market. Multiple projects were launched on the IDO platforms and the Solana hackathon was organized to attract new developers migrating to the platform.
The Solana ecosystem was assembling every critical lego and waiting for the right timing of the crypto market.
From the beginning of 2021, Solana along with its ecosystem have been matching in an ideal scenario as the DeFi stack of Solana has been completed. Therefore, every token related to Solana was bullish. The DeFi sector of Solana received all the attention of the media.
Cash flow and liquidity were migrating to the Solana ecosystem, bootstrapping multiple AMM, Lending, Yield Farming platforms. Users tried out those DeFi products and instantly loved the seamless experience. Therefore, the TVL inflow remained strong inside the ecosystem.
In September 2021, after reaching a 400,000 TPS peak caused by spamming network bots, the Solana blockchain was temporarily shut down then restarted after a few hours. This unfortunate event slowed down the Solana expedition since the SOL price drastically decreased.
The Solana Ecosystem
DeFi (Decentralized Finance) is the shifting of traditional financial products to decentralization without any intermediary. For every new blockchain, DeFi is always the most important component of the ecosystem since it attracts outside liquidity and new users to the ecosystem.
DeFi on Solana took off in the autumn of 2021, catching the right timing of the crypto market. Multiple DeFi projects have been deployed on the Sonala blockchain, creating a DeFi surge. First, they attracted new users to the platforms and let them experience the outstanding DeFi products.
To follow the NFT (Non-Fungible Token) trend, numerous projects have been launched to stir up the market. This shows the ability of the Solana ecosystem to reach out to the top blockchain.
Solana-based projects inherit all the advanced technologies of the blockchain platform such as high-speed transactions with low TX fees. Every transaction is executed in a blink of an eye, it’s seamless and smooth. Interestingly, projects on Solana often use a universal theme with a similar design concept.
Inside the Solana ecosystem, there is the coexistence of both centralized and decentralized stablecoins.
- Centralized stablecoins: USDT and USDC.
- Decentralized stablecoins: UST (Terra), PAI (Parrot), UPFI (UPFI Network), etc.
Currently, the stablecoin market is dominated by centralized stablecoins. Therefore, several projects proposed ideas of decentralized stablecoins to not depend on any centralized entity.
Stablecoin is a key metric that measures the cash flow into the ecosystem. They act as a medium of exchange and value storage, indicating the scaling threshold of the ecosystem.
At the beginning of 2021, there were almost none of the stablecoins inside the Solana ecosystem. After a few months, stablecoin companies gradually issued more and more stablecoins to satisfy the demand for value storage and usage.
At the time of writing, there is a $2.5B value of USDC and a $1.1B value of USDT that sums up over $3.6B value of stablecoins circulating inside the ecosystem.
How about Solana-based decentralized stablecoins? The market is getting heated since multiple algorithmic stablecoins are boarding the Solana ecosystem and funded by large VCs and investors, namely:
- Parrot Finance issues PAI stablecoin. Besides SPL tokens as collateral, the platform supports some ERC20 LP tokens as collateral to mint PAI on Solana. Now, users can farm on both Ethereum and Solana.
- Solana integrated with the Terra Network with billions of UST value to build a stablecoin bridge via two smart contracts (contract T and contract S). The bridge uses a mint-and-burn mechanism to transfer stablecoins between the two ecosystems.
- UXD Protocol is an algorithmic stablecoin backed by a derivatives exchange. The team raised $3M in a funding round led by Multicoin Capital.
However, the decentralized stablecoin landscape of Solana is still somewhat fragmented. BUSD on BSC and DAI on Ethereum are two notable examples of the leading stablecoin of each ecosystem.
Decentralized Exchange (DEX) is the leading sector of Solana since it provides seamless exchange services with high TX speed and low TX fees for users.
DEXs are taking up more TVL (over 50%) inside the ecosystem.
There are two main working principles of Solana-based DEXs.
- AMM DEXs: Orca, Saros, Cyclos, etc.
- Order-book DEXs: Serum, DEXLAB, Open Serum, Aldrin, etc.
- Hybrid AMM Orderbook DEX - Raydium.
As mentioned above, lending projects are dominated by DEXs in the Solana ecosystem in terms of TVL. However, TVL is gradually shifting towards the lending projects that need TVL to stabilize the platform.
Derivatives are always the practical application of DeFi, especially since blockchain technology can leverage the derivatives market to have an unlimited threshold and become decentralized.
Since the dYdX derivatives platform has surprised the crypto market, which derivatives platform will be an alternative to that layer-2 Ethereum-based project?
Mango Market is a derivatives platform powered by Solana and Serum. It’s now the biggest derivatives exchange with nearly $100M deposit value and over $30M borrowed value. This is an impressive number corresponding to the current situation.
However, last month, the deposit value and borrow value began to stop increasing and move in a stable range. Deposited assets from Mango Market V2 have to migrate to its newest v3. Therefore, this slows down the overall growth of the Mango Market.
Yield Farming and Asset Management
Besides AMM DEXs and lending platforms, yield farming platforms and asset management platforms are promising lands for investors to generate additional income.
Yield farming platforms have formed partnerships with other asset management platforms so as to bootstrap the mutual liquidity and incentivize users to be loyal to their platforms.
IDO platforms on Solana are performing well to accelerate new startup projects. Unlike other blockchains, Solana has more than 7 IDO launchpads, showing the demand for raising funds for new Solana-based projects.
- In operation: Solanium, Bocachica, and AcceleRaytor.
- In development: Solstarter, Solster, Lunapad (now SarosPad), Solpad, Oxbull, etc.
AcceleRaytor is the most successful IDO platform on Solana. It is integrated with the Raydium platform, therefore, it inherits the available community of the platform.
There are other IDO platforms still in development progress. For example, Solstarter raised millions of dollars in the last several months, but it hasn't completed any IDO launch yet.
IDO platforms play important roles in the ecosystem to accelerate new projects to boost the development process. They also act as means for marketing to the community by broadcasting the investment opportunities with high ROIs.
Oracle is the data gateway for every blockchain, connecting the outside world to the blockchain world. Since the Solana blockchain enables high-speed transactions, it needs specialized oracles to avoid data congestion and data manipulation.
In 2021, the NFT market is spurring the crypto world since numerous NFT collectibles are worth millions of dollars. The NFT market OpenSea and the gaming platform Axie are dominating the market since they are attracting lots of new users and they have more profitable business models than other DeFi protocols. The NFT hype seems to be expanding to the Solana ecosystem.
NFT legos on Solana have completed that range from NFT marketplaces, collectibles, infrastructure, entertainment, and Gaming/NFT. NFTs open a grand scenario for the Solana community to play and invest in.
Start Atlas and Aurory are the notable gaming projects on Solana. Since there is still no gaming project launching the mainnet, many expect Solana-based gaming projects will be able to beat the gaming giant Axie Infinity.
At the writing time, DeFi Land is a gaming project that is going to launch its IDO on Solanium. The Solana-based gaming sector has potential thanks to the advanced technology of the blockchain platform.
NFT collectibles have the most TVL in the NFT market of Solana. SolMokey and Degenerate Ape are notable NFT projects since they have a large TVL.
On Oct 1st, 2021, SolMonkey broke the Solana-NFT record with an NFT worth over $2M. This shows the NFT fever inside the ecosystem is red hot.
However, there are unfortunate incidents that happened to investors since their money was taken and disappeared for buying NFTs. For example, in Sep 2021, Cheesy Dizzy pulled the rug out to take investors’ over 400 SOLs (~$60,000).
NFTs are new but there are always some evil projects using well-planned schemes to steal your funds. Therefore, you should invest the amount that you are ready to risk.
Predictions about Solana Ecosystem
After the mainnet and all completed components, BSC and Ethereum are still expanding their blockchain platform and the ecosystem. Therefore, Solana is going on an infinite journey along with the ecosystem and the community. Coin98 Insights will put forward some predictions that might depict the future landscape of Solana.
Will Solana beat Ethereum? In terms of technologies, Solana has better performance than other 2.0 blockchain platforms, notably, faster TPS, cheaper TX fees, and multiple Smart Contract language support. In addition, the ultimate success of Solana does not only depend on technology but also on the team and the community.
Will Solana expand beyond DeFi and NFTs? Every component of the Solana ecosystem has been completed and is on its way to flourish. The Solana blockchain will be integrated into real applications such as telecommunications, artificial intelligence, government systems, etc.
NFT breakout on Solana? Investors have experienced the DeFi wave of Solana: the SPL token prices skyrocketed, giving them huge fortunes. At that time, NFT lego on Solana has not yet been completed as NFT collectibles were in the early stage and gaming/metaverse was not completed.
In terms of technology, the actualized TPS of the Solana blockchain is over 2,000 TPS, which is super fast compared to other blockchain platforms. However, in Sep 2021, the Solana mainnet beta was shut down after reaching the 400,000 TPS peak. The incident was settled down and multiple solutions were put forward. This shows the potential expansion of the ecosystem and investors expect similar incidents are not going to happen in the future.
The Solana blockchain hasn’t reached its full potential since every component has just been completed. The crypto market is expanding fast in 2021, the Solana ecosystem contributes a small part to the big picture. Therefore, Solana along with Solana-based projects are on the same journey to mutual success in the crypto market.
Investment opportunities with Solana Ecosystem
At the writing time, Solana has been super bullish since the SOL token skyrocketed to $191. Regarding technical analysis, all indicators are overbought and the price should have some correction and time to breathe out (Not Financial Advice).
Solana has outperformed other blockchain platforms in terms of value growth. If you invested $1,000 from the beginning of 2021, you would get over $53,000 for your investment. This shows the hype of Solana and the promising potential behind the Solana advanced technology.
Currently, the market cap of Solana is $46B, which is behind other big blockchain platforms such as Bitcoin, Ethereum, Cardano, and Binance Smart Chain. Solana is regarded as a potential alternative to other 2.0 blockchain platforms.
Tokens on Solana
The Solana ecosystem exploded in Q3 2021. Along with the uprising blockchain platform, multiple Solana-based projects released their SPL tokens that skyrocketed, gaining huge profits for all investors.
You can use your SPL tokens to deposit in the lending protocol to earn interest. In DeFi, decentralized exchange and lending platforms often have good performance to earn a stable income in a high volatility market.
For example, lending on Larix offers over 15% APY for supplying stablecoins.
Investors can use their tokens to generate additional tokens on multiple Solana-based yield farming platforms. This farming activity ensures investors get additional tokens sold for profits, but they can be exploited or manipulated by attackers via smart contracts.
For example, on Oct 8th, 2021, Almond released yield farming pools with high APYs where users can deposit Atrix LP tokens to farm for the ALM tokens. The event ignited the Solana ecosystem since the TVL has incredibly increased to over $300M after 3 days.
This doesn’t mean opportunities are gone. There are lots of similar exciting releases upcoming so you should follow the social media channels of potential projects.
Successful projects often distribute their tokens to early contributors or early users who interacted with the platform in the beginning. For example, dYdX distributed a token airdrop for its early adopters with over $20,000 on average for each user. Therefore, many are looking forward to getting token airdrops.
For example, Solend is a Solana-based lending platform with TVL nearly $200M. The Solend team tweeted about a token airdrop in the future. Interacting with the platform then getting rewards is an easy task to do, giving you more extra funds for future investment.
For every new emerging blockchain ecosystem, funds and support play an important role to accelerate the development of startups. Therefore, there are various IDO platforms for Solana-based projects to raise funds from investors.
To participate in IDOs, investors should follow the requirements of the IDO platform and do research on the invested project. Since IDO investment is considered risky and probably affected by unexpected factors, investors should carefully consider before risking the amount of money they are willing to lose.
For example, DeFi Land is a gaming/NFT project that is going to be launched on Solanium in Oct 2021.
Following the NFT trend sometimes generates huge fortunes for investors. Moreover, as the gaming projects on Solana are completed, users can play those games and earn NFT rewards.
To sum up, below are the key highlights of the article for readers’ convenience:
- Solana is a favorable environment for prominent ideas => attracting new investors and developers.
- NFT and Gaming projects might create a storm catching mass attention => opportunities for investment. However, there are risks of losing your investment.
- The Solana ecosystem is placed in the top blockchain leaderboard. In other words, Solana is developing at a fast pace. However, all legos of the ecosystem will have to be improved in the future.
- The number of new projects on Solana seems to increase as the blockchain has a large capacity to handle a large number of transactions.
- Solana has the potential to surpass Ethereum in terms of modern technologies. However, Ethereum is more decentralized, forming a solid network effect inside the ecosystem. Therefore, Solana will have to improvise and polish the system as well as the ecosystem.
Finally, that is all you need to know about Solana and the Solana ecosystem. I hope you’ve gained valuable information to understand the future potential behind Solana and its ecosystem.
If you want to know further about Solana, please leave a comment below and join Coin98 Community for further discussions about Crypto.