Solana has witnessed a remarkable transformation in the last 12 months, navigating past challenges such as network outages and the FTX saga. These events have shaped its perception and underscored the peculiar dynamics that govern its valuation. The SOL token plays a critical role in the project's appeal, illustrating a unique phenomenon where price significantly influences perception. A low token price could have branded the project as obsolete, yet a high valuation ($178 token price & $101B FDV at time of writing) attracts interest, demonstrating the impact of price appreciation on investor and developer attention.
At its core, Solana is a smart contract platform, akin to Ethereum, designed to support decentralized applications. What sets Solana apart is its robust backing from venture capital, with significant investments propelling the network. This VC involvement not only ensures financial support but also aligns strategic interests towards enhancing the token's value. The Solana ecosystem economics are stereotyped by token lock-ups with inflated fully diluted valuation, coupled with a limited circulating supply.
For developers, Solana presents a landscape with distinct challenges and opportunities. Unlike Ethereum, Solana employs a different programming language and has unique quirks, necessitating a bespoke approach to development. This divergence means that direct porting of smart contracts for decentralized exchanges or lending platforms from Ethereum is not feasible. Instead, Solana’s VC supporters foster unique projects with independent code and their own tokens, enriching the ecosystem with diversity. Despite its innovations, Solana's market penetration is estimated at only 5-10% of that achieved by Ethereum and its layer 2 solutions. However, this figure has likely doubled in the past year as Solana has rebounded from the repercussions of the FTX debacle, a crisis exacerbated by FTX's substantial ownership of Solana's supply and Alameda’s involvement in its VC ecosystem. This recovery signals resilience and perhaps future potential. Looking forward, Solana's trajectory could position it as a potential competitor to Ethereum's vision of a global computing platform. Realistically it’s more likely, in my opinion, to play a secondary role, akin to Litecoin's relationship with Bitcoin. This does not diminish its value; rather, it highlights the importance of having alternatives and fostering competition within the blockchain industry. From an investment perspective, caution is advised given the current high valuations across the cryptocurrency market. Entering this space now carries increased risk, particularly for those seeking short-term gains without a solid exit strategy. For those considering Solana specifically, amidst its recent popularity, a more measured approach such as dollar-cost averaging may be prudent. Attention shifts fast in crypto markets and there may be a favorable entry point when it is out of the spot light. As the blockchain sector continues to evolve, Solana's role, whether as a direct competitor to Ethereum or as a valuable alternative, will remain a focal point of interest and speculation.
All eyes on BTC and the flows in and out of the ETF’s.
We made a new all time high, the legend of the four year cycle continues, but I think most market participants are expecting it to get back to upOnly soon and new highs are imminent following the halving in just over a month. Perhaps a crowded trade but the chart still looks good, the halving is coming, the crypto comeback is still on. Only slight concern is the lack of media interest and mainstream attention that making a new all time high received. I expected this to be a big deal and to get a wider reach, continuing the accelerating price action higher. This didn’t happen and I still don’t think we are at the “everyone’s talking about crypto again” stage. Hopefully that’s coming later and the blockchain industry can start to reach a wider audience (users) in due course.
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