Is Solana a good investment? A fundamental breakdown

Is Solana a good investment? A fundamental breakdown.

With the Crypto market as a whole tumbling down a lot of investors and now starting to look for new investments to buy at discounted rates. One of the most eye-catching cryptocurrencies at the moment is Solana, and for good reason. 

What is Solana?

Solana is a layer 1 network focusing on low gas fees and scalability. It currently boasts transaction speeds of 50,000 transactions per second. To put this into perspective Ethereum manages about 15 transactions per second. To top this off Solanas fees are also very minimal, charging just $0.0001 per transaction, again let's place this up against Ethereum which often charges anywhere from $10 right up to $100 per transaction.

Solana uses proof of stake (POS) as their consensus mechanism which allows miners to use existing coins to validate transactions and mints new ones. This is a much better system to use compared to what Ethereum uses which is proof of work (POW). This allows Solana to be much more scalable than Ethereum.

Wallet growth

Even during the bear market Solana is experiencing a rapidly growing wallet user base, this tells us that even during turmoil in the markets users are still using Solana not just as an investment but also as a network. This is rare in crypto and definitely not something we want to ignore. 

The most popular wallet for Solana is Phantom, a browser extension and also mobile wallet with a very clean UI and smooth operating experience. From this data from Tech Dreams we can see that between January 1st 2022 and January 30th 2022 there were 6.89 million unique Solana wallets. 

Developers at work

One of the points often brought up about Solana is its network reliability. Over the past 6 months the network has crashed multiple times leaving potential and current investors wondering if Solana truly is as scalable as previously mentioned.

What a lot of people do not realize is that Solana is still in Beta, it has not launched its full 100% finished product. The developers are constantly rolling out new updates and when the network has crashed they have been very active in bringing it back online in a very timely manner. Network crashes can only be expected for a beta product running this number of transactions. It reminds me a lot of Ethereum in early 2016/2017 where they were having the same scaling issues.

Just in the past week the developers on Solana have released a new update which increased the transactions per second and patched up a few of the holes in the network that were causing the outages. This is very reassuring to see and shows that the network is here for the long term.

NFTs

Some people hate them and some people love them, NFTs.

Solana is possibly best known for its NFT ecosystem and community. If you have spent any time on Crypto or NFT Twitter you will have noticed how loud and tightnit the Solana NFT community is. With the network offering such high transactions per second with such low fees it makes it the perfect network to trade and create NFTs, and the data reflects that.

According to the data from Crypto Slam we can see that Solana is ranked number 2 in NFT trading volume, beaten only by the kingpin Ethereum. However it is interesting to note that Solana has more transactions and almost the same amount of buyers as Ethereum does, this is due to the low gas fees making it a perfect place for people with any portfolio size to trade and play. 

Solana has some great NFT projects with strong communities such as DeGods, Okay Bears, Primates, and lots more.

With the NFT market growing so fast and Solana offering a much better network for it there is a chance that we see Solana take that number 1 spot from Ethereum. Now if you compare the Ethereum market cap of $134 billion with Solanas of $11 billion we can see Solana has a lot of room for potential growth.

Daily transactions

With rapidly growing wallets and a booming NFT ecosystem Solana boasts an impressive amount of daily transactions. Which at the end of the day is what the network is here to achieve.

As you can see in the graph supplied by The Block Solana has had its ups and downs in number of transactions over the past year and has averaged 30 million transactions per day. Compare this to Ethereum's average of 1 million transactions per day we can clearly see which network is being used the most. 

Solanas daily transactions have kept fairly steady throughout this bear market which has shown that the network is getting used no matter the market conditions and will carry on being used. This is a great indicator that Solana can and most likely will survive the bear market even if it lasts for 4-5 years. Any cryptocurrency you are looking to invest in especially during a bear market must be vetted to be sure it will survive till the next bull run as a lot of projects wont. However when we see stats like Solanas wallet growth, daily transactions, NFT volume it gives us a pretty clear picture that it has strong fundamentals and is here to stick around.

Another great thing to note about Solana is that it is open source so developers are free to build on it and use the source code as they wish. This was a great move by the Solana team to increase the number of developers and dapps being built on the network. 

Without developers to build on top of a network then what is it? Just a network with nothing you can use. From the graph above you can see that Solana is having huge developer growth of 313% in one year. Beaten only by Luna, not anymore I suspect.

Conclusion

To wrap this up we can see that fundamentally Solana has great potential and is already growing at a rapid rate. As always, do your own research.

Is Solana a good investment? A fundamental breakdown.

With the Crypto market as a whole tumbling down a lot of investors and now starting to look for new investments to buy at discounted rates. One of the most eye-catching cryptocurrencies at the moment is Solana, and for good reason. 

What is Solana?

Solana is a layer 1 network focusing on low gas fees and scalability. It currently boasts transaction speeds of 50,000 transactions per second. To put this into perspective Ethereum manages about 15 transactions per second. To top this off Solanas fees are also very minimal, charging just $0.0001 per transaction, again let's place this up against Ethereum which often charges anywhere from $10 right up to $100 per transaction.

Solana uses proof of stake (POS) as their consensus mechanism which allows miners to use existing coins to validate transactions and mints new ones. This is a much better system to use compared to what Ethereum uses which is proof of work (POW). This allows Solana to be much more scalable than Ethereum.

Wallet growth

Even during the bear market Solana is experiencing a rapidly growing wallet user base, this tells us that even during turmoil in the markets users are still using Solana not just as an investment but also as a network. This is rare in crypto and definitely not something we want to ignore. 

The most popular wallet for Solana is Phantom, a browser extension and also mobile wallet with a very clean UI and smooth operating experience. From this data from Tech Dreams we can see that between January 1st 2022 and January 30th 2022 there were 6.89 million unique Solana wallets. 

Developers at work

One of the points often brought up about Solana is its network reliability. Over the past 6 months the network has crashed multiple times leaving potential and current investors wondering if Solana truly is as scalable as previously mentioned.

What a lot of people do not realize is that Solana is still in Beta, it has not launched its full 100% finished product. The developers are constantly rolling out new updates and when the network has crashed they have been very active in bringing it back online in a very timely manner. Network crashes can only be expected for a beta product running this number of transactions. It reminds me a lot of Ethereum in early 2016/2017 where they were having the same scaling issues.

Just in the past week the developers on Solana have released a new update which increased the transactions per second and patched up a few of the holes in the network that were causing the outages. This is very reassuring to see and shows that the network is here for the long term.

NFTs

Some people hate them and some people love them, NFTs.

Solana is possibly best known for its NFT ecosystem and community. If you have spent any time on Crypto or NFT Twitter you will have noticed how loud and tightnit the Solana NFT community is. With the network offering such high transactions per second with such low fees it makes it the perfect network to trade and create NFTs, and the data reflects that.

According to the data from Crypto Slam we can see that Solana is ranked number 2 in NFT trading volume, beaten only by the kingpin Ethereum. However it is interesting to note that Solana has more transactions and almost the same amount of buyers as Ethereum does, this is due to the low gas fees making it a perfect place for people with any portfolio size to trade and play. 

Solana has some great NFT projects with strong communities such as DeGods, Okay Bears, Primates, and lots more.

With the NFT market growing so fast and Solana offering a much better network for it there is a chance that we see Solana take that number 1 spot from Ethereum. Now if you compare the Ethereum market cap of $134 billion with Solanas of $11 billion we can see Solana has a lot of room for potential growth.

Daily transactions

With rapidly growing wallets and a booming NFT ecosystem Solana boasts an impressive amount of daily transactions. Which at the end of the day is what the network is here to achieve.

As you can see in the graph supplied by The Block Solana has had its ups and downs in number of transactions over the past year and has averaged 30 million transactions per day. Compare this to Ethereum's average of 1 million transactions per day we can clearly see which network is being used the most. 

Solanas daily transactions have kept fairly steady throughout this bear market which has shown that the network is getting used no matter the market conditions and will carry on being used. This is a great indicator that Solana can and most likely will survive the bear market even if it lasts for 4-5 years. Any cryptocurrency you are looking to invest in especially during a bear market must be vetted to be sure it will survive till the next bull run as a lot of projects wont. However when we see stats like Solanas wallet growth, daily transactions, NFT volume it gives us a pretty clear picture that it has strong fundamentals and is here to stick around.

Another great thing to note about Solana is that it is open source so developers are free to build on it and use the source code as they wish. This was a great move by the Solana team to increase the number of developers and dapps being built on the network. 

Without developers to build on top of a network then what is it? Just a network with nothing you can use. From the graph above you can see that Solana is having huge developer growth of 313% in one year. Beaten only by Luna, not anymore I suspect.

Conclusion

To wrap this up we can see that fundamentally Solana has great potential and is already growing at a rapid rate. As always, do your own research.

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