Could Solana be the Next Cryptocurrency to Meet Its Demise?
Though Solana, dubbed “the great Ethereum killer,” was developed to revolutionize the world of decentralized finance, its greatest success to date on the blockchain has come in the world of non-fungible tokens.
There are periodic waves of projects in the cryptocurrency market that aim to topple established players. For instance, the early days of Bitcoin's (BTC) existence saw the emergence of altcoins promoted as “practice money” for everyday transactions.
These cryptocurrencies claimed they were superior to Bitcoin in speed and low transaction fees, but they never gained widespread adoption for these reasons. Bitcoin Cash (BCH) and Litecoin (LTC) prove this true.
Both alternative coins broke into the top 10, but neither has been able to sustain its popularity for long. This could be because no one wants a new Bitcoin, or neither coin could keep up with market trends and provide compelling reasons to hold onto it. Ethereum was the alternative coin that made a difference in the cryptocurrency market (ETH).
Instead of trying to be a “Bitcoin killer,” this cryptocurrency brought decentralized finance (DeFi), non-fungible tokens, and smart contracts to the blockchain (NFTs). Similar to Bitcoin's early days of heavy usage, Ethereum has some quirks when it becomes widespread, such as slowness and high fees when its network is pushed to its limits. Because of this, numerous ETH-killers emerged, one of which is Solana (SOL).
Though Solana, dubbed “the great Ethereum killer,” was developed to revolutionize the world of decentralized finance, its greatest success to date on the blockchain has come in the world of non-fungible tokens. Its network can ease the development of dApps or decentralized applications. The cryptocurrency uses a hybrid proof-of-stake (PoS) and proof-of-history (PoH) consensus model to guarantee scalability.
It also has a low transaction cost because it is made to have low fees, even for apps that have billions of users. These features make Solana a formidable alternative to Ethereum. It seems that history keeps repeating itself, as a new project that claims to be a “killer” of the old one continues to lose ground in the marketplace. BitMEX co-founder Arthur Hayes stated that no “Ethereum killer” altcoin can compete with the dominant smart contract platform.
According to the businessman, an individual developer's skill is more important than the story of quick and easy deals. “Several thousand people are working on Ethereum. It doesn't matter if there are only a few hundred nodes in the next blockchain. Developers built this ecosystem. They create apps.”
In 2022, Solana experienced a severe correction, along with most other cryptocurrencies. Compared to its all-time high in November 2021, the alternative coin is down by more than 90%. But unlike other projects, this one sank due to factors inherent to the Solana ecosystem. During the months that the cryptocurrency has been around, network outages on the smart contracts platform have become common.
As of this writing, eight network outages have affected the altcoin since its launch in 2020. Thus, the community is growing increasingly dissatisfied, arguing that Solana's “Achilles heel” is the weakness of its ecosystem, which prevents the cryptocurrency from taking off and demonstrating its potential to outperform Ethereum. “To tell the truth, SOL is not very creative. The first significant blockchain to be so careless with its core principles while passing it off as novel (to entice investors)," - Cyber Capital founder and cryptocurrency expert Justin Bons made this statement.
Sam Bankman-(SBF) Fried's backing of Solana fueled skepticism because of his history of creating failed businesses like FTX and Alameda Research, both of which invested heavily in the SOL ecosystem. Upon filing for bankruptcy, the trading firm Alameda is expected to sell the tokens it invested in on the Solana network. Furthermore, the Treasury has stopped funding projects that were counting on those funds to continue.
Solana's total blocked amount dropped to a six-month low as the SBF empire's scenario spread panic throughout the system. Moreover, it resulted in the SOL token losing value and falling out of the top 10. Founder Solana claimed that the company had no FTX assets. It still has time to change, according to Anatoly Yakovenko, who estimated a runway of 30 months under current conditions. Although, it could be a significant challenge to extract Solana from the Crypto Graveyard.
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