How the need for fast, scalable, Ethereum alternatives boosted Solana (SOL)trading volume

Spread the love

The DeFi sector is booming again and the need for fast, scalable Ethereum alternatives has taken Solana (SOL) trading volumes to record highs.

2021 got off to a fast start and the latest crypto bull market saw commodities including Bitcoin (BTC) and Ether (ETH) shoot fresh all-time peaks almost regular.


Although recent price hikes are good for consumers, they raise a number of problems related to fees, transaction rates and the centralisation of what is supposed to be a decentralised environment. After mid-2020 institutional funds have been gradually pouring into cryptocurrencies and this exacerbates the problem of scalability, high transaction costs and long confirmation periods on the Bitcoin and Ethereum blockchain.

Eth2 continues to roll out, but it may also be some time before consumers can take advantage of its host of new features. This leaves the door open for other potential candidates to fill the vacuum, and a handful of layer 2 initiatives are gaining momentum in the decentralised finance sector.

Mr Solana is one such project that has made headlines in the last 6 months (SOL). Created by Anatoly Yakovenko and built a team of former engineers from internationally recognised firms, including Intel, Dropbox and Qualcomm, Solana promises to be a censorship-resistant blockchain that offers the decentralised infrastructure needed for global adoption.


SOL/USDT 4-hour chart. Source: TradingView

Some analysts consider the project to be a future Ethereum rival and FTX exchange co-founder and CEO Sam Bankman-Fried backed the project by selecting it to host his DeFi project called Serum.

According to Bankman-Fried, Ethereum is unable to deal with the exponential development seen in the decentralised financial market and the only way to overcome the problem of scalability and transaction costs is to expand on other networks such as Solana.

RECOMMENDED READ:  Kraken CEO weighs in on Bitcoin, Ethereum, and Polkadot, this is what he thinks.

Bankman-Fried claims to have thoroughly checked more than 30 of the biggest blockchain ventures, including Ethereum, until it settled on Solana, and in the past pointed to the network’s capacity to handle 50,000 transactions a second.

When asked about scaling changes for Eth2, Bankman-Fried indicated that it is already inadequate, saying that the crypto industry wants something that is “not just 100 times faster than Ethereum, we need, like, a million times faster than Ethereum.”

Solana token gains traction

Initially after an exchange listing, the SOL token traded between $0.50 and $0.91 in April and July 2020. This was before any major project updates were revealed, but on 27 July, Bankman-Fried tweeted:

“Serum is built on the @solana blockchain. Solana can process 10,000 times as much as Ethereum; and it’s 1,000,000 times cheaper. And unlike many side chains, Solana is a fully-fledged, decentralized blockchain with over 100 validators.”

SOL/USDT daily chart. Source: TradingView

Shortly after the launch, SOL saw a substantial uptick in buying pressure as and over the next two months the value and price soared as the average daily volume grew from $1 million to $41 million and the token price rose to $4.89.

As the DeFi bull run ended and the traders made money, SOL was not spared the carnage and its price fall as low as $1.21 before reclaiming the $3.00 range in the last month.

RECOMMENDED READ:  Dogecoin, Ethereum, XRP Price Movement Analysis for 28th March, 2021

Apart from serving as an effective solution to the Etheruem network, the Solana blockchain has followed the footsteps of other networks that understand how integral stablecoins are to the development of the crypto market.

In response to the recent announcement by the OCC that banks “may use new technologies, including INVNs and related stablecoins, to perform bank-enabled functions, such as payment activities,” the Solana team tweeted that acceptance would also help SOL and the network.

The team said:

“Big news for public blockchains & stablecoins! USDC is already integrated on Solana, which is the only chain today that can settle 50k+ txns per second, with fees as low as $0.00001 per txn. Over $50,000,000 in USDC-SPL is currently in circulation!”


 327 Interactions,  2 today

Flash Loans – Collateral swaps and DeFi lending Explained

Flash loans are a modern kind of uncollateralized lending available from DeFi platforms such as Aave and dYdX. Flash loans Read more

The Oasis Foundation has announced the launch of the Tidal DeFi insurance platform.

A renewed emphasis on DeFi may push traffic to the Oasis Network. The Oasis Foundation, an offshoot of Oasis Network Read more

How AAVE, COMP, and MKR aided DeFi’s turnaround

The altcoin market recovered quickly, and in the case of DeFi's top coins, it recovered even faster. The market capitalisation Read more

Is now the time to spend in COMP?

DeFi's success may have dwindled marginally in comparison to the DeFi Summer in 2020. However, this does not mean that Read more

Kyber Network also offers spike pricing for DeFi token swaps in the form of Uber.

On the latest DMM, dynamic fees would increase capital performance. Exchange that is decentralised In what it says is a Read more

DeFi is currently the equivalent of a top 40 U.S. bank, having surpassed $100 billion TVL.

It'll be a long journey to the top, but some ecosystem players say we'll get there finally. According to DeFiLlama, Read more

Why DeFi must strike a delicate balance in regards to FATF guidelines

In March, the Financial Action Task Force [FATF] issued draught recommendations on the risk-based approach to virtual properties. This recently Read more

 Shopify’s CEO considering merging the e-commerce giant into the DeFi ecosystem.

The CEO of Shopify seems to have got the crypto bug, which may be a blessing for adoption. The CEO Read more

Here are a few stuff you should be aware of regarding Ethereum and DeFi’s friendship.

Ethereum's price has been rising in recent days, with the altcoin momentarily reaching the $2,000 threshold before slipping down below Read more

Platforms for DeFi Polygon sidechain integrations are announced by Zapper and Aave.

The former Ethereum rival will be integrated by two DeFi heavyweights. Layer-two sidechain Polygon could be emerging as a contender Read more

Returns on DeFi ETFs vs. SUSHI, UNI, COMP, and AAVE compared

Based on their YTD price activity, the following DeFi tokens – SUSHI, AAVE, UNI, COMP, and MKR – are poised Read more

Leave a Reply

Contact Us