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Why, in 2023, is Solana the talk of the town?

Solana surges in 2023, joining top blockchains with its unique tech, large user base, and promising price forecasts, challenging Ethereum’s dominance.

As of 2023, Solana (SOL) has earned its place among the top 3 layer-1 blockchains, sharing the spotlight with giants like Ethereum (ETH) and Binance Chain (BNB). 

What’s particularly intriguing is that while Solana’s market capitalization sits at about 7.5% of Ethereum’s at nearly $16.5 billion, its daily active user base stands at 66% of Ethereum’s, signaling an engaged and growing community.

Over the last 30 days, SOL’s price experienced a remarkable increase of nearly 90%, with a substantial 30% growth occurring in just the previous week. This aligns with the debut of Firedancer, its highly awaited scaling solution, on the testnet.

Moreover, this year has been kind to Solana, showcasing a marked improvement in metrics such as uptime and transactions per second. Coinbase, a prominent US crypto exchange, acknowledges Solana as a formidable contender to Ethereum in the layer-1 blockchain space.

Let’s uncover the elements fueling Solana’s growth, understand what it is, dissect its technological advancements, and take a closer look at its expanding community and ecosystem.

What is Solana, and how does it work?

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Solana, often abbreviated as SOL, is a high-performance layer-1 blockchain designed to support decentralized applications (dApps) and crypto projects at large scales.

For instance, a real-world application on Solana might be a decentralized exchange (DEX) where thousands of trades happen every second. The architecture of Solana facilitates the processing of these trades, aiming for efficiency, security, and accuracy.

Solana introduces a mechanism known as proof of history (PoH), setting it apart from some traditional consensus methods. PoH is designed to generate a historical record to verify the occurrence of an event at a specific time. 

This is achieved by encoding the passage of time in the data before it becomes a part of the ledger. The intention is to streamline the consensus-reaching process across nodes, as they have a shared, trusted notion of time.

This emphasis on time-saving is further realized in Solana’s Tower BFT, a byzantine fault-tolerant derivative of the Practical Byzantine Fault Tolerance (PBFT) consensus.

Tower BFT utilizes the synchronized clock provided by PoH to reduce messaging overhead and latency. This allows for faster confirmations of transactions without compromising on security.

Solana also features the Gulf Stream protocol, which attempts to optimize transaction handling by pre-processing and sending them to validators prior to the completion of the previous transaction set. This approach is intended to reduce confirmation times and improve network efficiency.

When considering all these mechanisms together, Solana aims to support a high volume of transactions per second, positioning itself as a competitive entity in the blockchain space.

Solana’s tokenomics: understanding SOL’s role and distribution

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Solana’s financial structure is centered around its native token, SOL. This token has multiple functions within the network. The primary use of SOL is for transactions and for users to interact with dApps on the Solana platform. 

Simply put, if a user wants to carry out an operation or use a dApp on Solana, they need SOL.

Staking is another important function of SOL. Users can help secure the network by staking their SOL tokens. They can do this by either becoming validators themselves or by assigning their tokens to existing validators. 

Those who stake their tokens are rewarded, and the annual percentage yield (APY) for this is typically between 7-8%. However, it’s important to mention that this rate can change based on several factors.

Validators play a crucial role in the network’s security. They receive new SOL tokens as rewards, as well as a share of transaction fees. This approach encourages active participation in the network and aims to ensure its stability.

Regarding the distribution of SOL, recent data shows that out of a total supply of 561 million tokens, about 420 million are in circulation. This implies that approximately 141 million SOL tokens have been burned over time.

Solana use cases 

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Solana’s blockchain technology has nurtured a variety of use cases due to its high scalability and low transaction fees. Here are some notable use cases:

Decentralized finance (defi)

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Solana’s high throughput and low transaction fees make it a fertile ground for defi applications like DEXs, lending protocols, and digital wallets. Examples include Solana-based DEXs like Orca and Serum, and lending platforms like Apricot Finance and Solend​.

Non-fungible tokens (NFTs)

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Solana facilitates the creation of NFT platforms and marketplaces where users can mint, buy, and sell NFTs. Notable platforms include Metaplex and Solanart, which allow users to interact with digital artwork and other unique assets​.


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Solana hosts games with play-to-earn (P2E) systems, enabling players to earn cryptocurrencies and NFTs through gameplay. Examples include online metaverses like Chainers and Aurory, and survival-puzzle games like Naga Kingdom​.

Web3 applications

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Solana supports the development of web3 apps that leverage modern internet technologies. Examples include Audius, a decentralized audio streaming app, Squads, a treasury fund management application, and Alchemy, a platform for building dApps quickly​.

Cross-chain functionality

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Solana has also been leveraged for cross-chain transactions, as seen with the integration of USDC-SPL in Trust Wallet, enabling users to send and receive USDC with minimal fees and swift transaction times.

Solana’s hurdles in 2023

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In 2023, Solana navigated a rough path marked by several network outages, casting a shadow on its robustness.

The most notable was a slowdown in block production on Feb. 25, following an upgrade attempt from validator software version 1.13 to 1.14, which led to considerable disruptions. Efforts to revert to version 1.13 were insufficient, ultimately necessitating a network restart.

The Solana network is currently restarting after an issue during the upgrade from 1.13 to 1.14 that slowed block finalization

Once validators with 80% of stake have restarted the network will resume

You can track the progress of the restart here:https://t.co/HclrUqWQ2y

— Solana 🧭 Compass 🔥💃 (@SolanaCompass) February 25, 2023

The February incident wasn’t singular; Solana contended with multiple outages in the past, spotlighting stability as a critical area for improvement. These technical difficulties attracted criticism from the broader blockchain community and competitors, stirring a debate about Solana’s reliability as a Layer 1 solution.

Complicating matters, the root causes of certain outages remained elusive, even to Solana’s developers, leaving some issues unresolved over extended periods. This ambiguity and the recurring downtimes prompted concerns regarding Solana’s reliability, particularly given the fierce competition in the blockchain space.

Solana long-term trend and price prediction

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The Solana price has attracted attention recently, with many keeping a close eye on insights into its potential trajectory amid bullish market sentiment. 

According to DigitalCoinPrice, the Solana crypto price is set to reach around $83.44 by the end of 2023. The Solana price prediction for 2024 is approximately $94.60. By 2025, it’s anticipated to climb to $141.53 and $389.83 by 2030.

Despite the potential shown by Solana in various domains, it’s essential to consider the rocky patches it navigated through in 2023, which have led some crypto analysts to project a lower price trajectory for SOL.

Reflecting on the slowdown in block production and recurring outages this year, some analysts have exercised caution in their forecasts, predicting an average SOL rate of around $23.89 in January 2024, which could potentially dip to a minimum of $23.34, with a maximum cap at $24.43.

Yet, those interested in the Solana crypto price should be wary of banking solely on forecasts. The volatile nature of the crypto market, combined with ever-evolving Solana news, suggests that price predictions shouldn’t be the sole basis for investment decisions.

Investors must exercise caution and adhere to the cardinal rule of investing: never invest more than you can afford to lose. It’s advisable to conduct thorough research, understand the inherent risks, and consider seeking advice from financial advisors before making any investment decisions.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.


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