Solana Blockchain protocol faces growing pains
There are bound to be some pains when you’re traveling at the speed of light. After its hyper-growth to becoming the seventh-largest crypto by market cap, Solana ($SOL) is dealing with some issues — meanwhile, others are trying to take advantage.
Banks and payment companies are sweating…
During 2021’s Solana Summer year, the Solana blockchain exploded in usage and popularity — its token growing an astonishing 98x. Similar to Ethereum, Solana is a blockchain protocol facilitating online transactions — a.k.a payments operating system.
- Since its founding, Solana has processed over 53B transactions at a cost of $0.00025 each.
- It performs over 2,300 transactions per second (TPS) — with a theoretical max of 65,000 TPS.
In comparison, Ethereum — the second largest network — handles 16 TPS with an average cost of ~$29, while Visa handles ~1,700 TPS.
Solana’s advantage is speed, cost and scalability — reasons why hundreds of applications are built on top of it, including online games, NFTs and trading platforms. Bank of America even called Solana the “Visa of the digital assets ecosystem”.
Hundreds of chains fighting for developers
With Solana’s network having launched less than two years ago, its growing pains are inevitable — such as network issues as transactions increase and become more complex.
- The past 6 months saw several network congestions — the first being in September when the network went down for 27 hours.
- Last weekend, there was another congestion and outage that lasted nearly 30 hours.
Since then, Solana developers were quick to address issues. A new network upgrade due in 4-5 weeks — but many are still questioning its future.
- Established competitors, Terra ($LUNA) and Avalanche ($AVAX) — of SoLunAvax — are fighting for a place in the future of blockchain.
- Recently protocols like Fantom ($FTM) and Near Protocol ($NEAR) are also growing in popularity — among a hundred others with less traction.
Investors: Multi-chain future?
The industry is moving so quickly it’s difficult to see which platforms will remain. Will blockchains follow the path of existing operating systems, where a few dominate the industry (i.e. Windows/Apple and Android/MacOS)?
- Crypto veterans are leaning towards a multi-chain future where specific blockchains are built for different applications.
- Example: Ethereum for applications requiring higher security (i.e. data transfers) and Solana for low-cost transactions (i.e. trading, NFTs).
In crypto’s short existence, Bitcoin and Ethereum are among the few managing to survive the crypto crashes — while others could still go to zero.