This article will look at the fundamentals of Solana, its platform, and its growth potential. As a Layer 1 blockchain, Solana is not decentralized enough. It needs to solve security concerns before becoming a $500 coin. And it is not yet proof of stake (PoS), which can be a disadvantage if a user wants to use the same private key multiple times.
Solana – A Layer 1 Blockchain
While Solana is a relatively new cryptocurrency, it’s already available to investors. It can be purchased on numerous exchanges, including FTX US, Binance US, Coinbase Pro, Kucoin, and Bybit. This cryptocurrency’s price is above its 50-day moving average (MA), indicating a bullish state. The price of Solana is currently trading above the 50-day moving average (MA).
The Solana network was down for 18 hours last September due to bot spam. The Solana team, led by Sam Bankman-Fried, comprises crypto heavyweights such as FTX and some private venture investors. The blockchain’s growth was fueled by developer engagement. Solana currently has an ecosystem spanning various industries, though most are finance-related. As the blockchain grows, more applications are being developed.
Ethereum is the dominant layer-2 blockchain, but its Proof of Work mining system has become problematic for transaction speed and scalability. As a result, many intelligent contract-enabled Layer 1 blockchains were created to tackle these issues. Solana and Algorand, two of the most prominent Layer 1 blockchains, leverage a Proof of Stake consensus mechanism and other blockchain construction tactics to improve their efficiency and scalability. Avalanche, meanwhile, is built to be interoperable with other chains.
According to analysts, Solana (SOL) could see significant price rallies in the next six years. Solana (SOL) might hit $300 in 2024 if it sustains significant resistance levels. It may reach as high as $530 in four years and as high as $620 by 2030. If you’re an investor, I recommend buying Solana (SOL) now.
It Is Not Decentralized Enough
Solana is not decentralized enough, according to critics. The token’s total supply is unclear and the company has yet to announce its final number. Justin Bons, creator of the popular crypto fund Cyber Capital, recently slammed the project for fraud and deception. Solana lacks the decentralization that Ethereum offers, with over 200,000 validators. There is no definite limit to the number of coins, which has sparked inflation fears.
Solana is not decentralized enough because it hasn’t been designed to handle high-frequency trading, perpetual contracts, or financial derivatives. Its design is suited for a world where transactions take milliseconds rather than seconds. Nevertheless, Solana has many advantages over its competitors, including low costs, high transaction rates, and a user-friendly developer kit. In the long run, this could make it the leading layer-1 network.
As a result, it has lost 85% of its value since its high in February. This is likely due to DDoS attacks and network failures. However, it is worth noting that Solana is now working to improve these qualities. It has partnered with companies in the NFT and decentralized finance fields and has implemented tokenized KYC systems. The system also boasts of almost free gas fees and is said to be the fastest blockchain mechanism.
According to Chris McCann, a seed investor in the project, Solana is not decentralized enough. Its ecosystem lacks the decentralization needed to reach scale. Solana’s ecosystem is not decentralized enough, and there’s no way it can be scaled until it has a community of developers. Solana can be exchanged on the FTX Exchange or Coinbase. Coinbase is the most accessible exchange to use for beginners.
Needs To Resolve Security Issues
The Solana token has seen a relatively low performance for the past three months, six months, and thirty days. This is because the rise in the cryptocurrency market has impacted Solana’s value. Crowdwisdom360 collates data from all over the web and does not provide any in-house view on future trends. Consequently, it is best to consult an investment advisor before making investment decisions.
Solana’s ecosystem has experienced explosive growth in 2021, doubling the number of developers. As the third-generation blockchain, the platform uses a Proof-of-Work and Proof-of-History mechanism to verify transactions. It has experienced a series of outages in the last two years, with the Solana Foundation blaming force-majeure for some of the problems.
Solana’s vulnerability in the Solana network has resulted in multiple attacks. During the short time since the project was launched, it has experienced six instances of network failures, including an outage of the entire network in January 2022. The outages were the result of too many duplicate transactions in the network. The outage caused increased market volatility, resulting in concentrated sell-offs and liquidations, and stressed the network’s throughput.
While Solana launched with a total supply of 500 million SOL tokens, nearly two-thirds of them are still locked in DeFi. The company was founded in five seed rounds and four private sales, with nearly 16% of the tokens sold to investors, founders, and community reserves. The remaining SOL tokens, about 12%, are held by the Solana Foundation, which is based in Geneva.
Proof Of Stake (PoS) Blockchain
A Proof of Stake system means that all validators on a particular blockchain have a fixed number of tokens. To stake a token in Solana, a user must transfer it to a supported wallet, such as the Ledger Nano X. Once staked; the stake account will have a different address than the linked wallet. If staked tokens are not used immediately, a validator can delegate these tokens to other validators, which will earn them a profit.
Solana uses a Proof of History method for consensus formation, which allows users to create a record of events. This allows them to prove that the same transaction happened at a given time in the past. This method also uses high-frequency Verifiable Delay Functions, which require several sequential steps to be evaluated. Solana differs from other blockchains in terms of its voting process.
The Solana Protocol has a team of tech experts and developers who aim to build a more scalable, trustless distributed network. These companies are well-known tech companies, including Apple, Microsoft, Qualcomm, and Google.
Solana is a Proof of Staking (PoS) blockchain boasts a theoretical peak capacity of 65,000 transactions per second. Although fast and cheap, it is not without controversy. The Solana protocol is a hybrid of Proof of Stake (PoS) and Proof of History (PoH). The PoS protocol requires that cryptocurrency owners stake their coins to a validator to ensure the accuracy of the information on the blockchain.
Read More: Is Solana Cryptocurrency a Better Investment Than Ethereum?
It Needs To Prevent Maintenance Downtime
Solana has been suffering from intermittent outages in recent months. It recently suffered three outages, one of which lasted almost four hours. The outage was the fifth in 2022 overall and the third major outage for Solana. Despite Solana’s reputation as a high-performance blockchain, the service is prone to outages. Here are some of the reasons why Solana might experience maintenance downtime:
During the latest outage, the Solana Mainnet Beta cluster stopped creating blocks. This led to 200 Solana network validators initiating instructions for restarting the network. Once the network restarted, no funds were lost during the outage. In the long run, this outage is a warning sign that the system needs to improve its handling of maintenance. The current protocol is unable to prevent this kind of outage.
Solana must fix its security issues and preventive maintenance downtime. Hackers can cause downtime and cause users to lose trust in the project, so it must resolve these issues. Downtimes will discourage users from using Solana. This is particularly important because the cryptocurrency is designed to be a decentralized system. If it is hacked, it will lead to users deciding not to use the service.
Solana’s blockchain network has suffered several outages over the past two years. On May 1, the network went down due to a failure in the network’s validator network. As more validators upgrade, performance should improve. Assuming the network’s performance improves, it is likely that Solana’s network will be up and running in less than 24 hours. Solana is an excellent investment for cryptocurrency enthusiasts as long as it can maintain this high quality of service.
