Why Solana maintains high growth potential
Decentralisation is a key indicator of top-tier blockchains' robustness. Among smart contract networks, Solana is second only to Ethereum, with cheap transaction fees and average network speeds often exceeding 3,000 transactions per second. Unstoppable Finance estimates that the network has a higher number of validators and a Nakamoto coefficient than its peers.
But if things were so rosy, Solana wouldn't be trading at 86% below its record high.
Frequent crashes, transaction delays and network outages are a fly in the ointment. On average, Solana loses one work day per month. In Q2 2022, that led to a 17.6% decrease in the average number of transactions and a 44.4% drop in revenue.
The crisis gripping the cryptocurrency market also contributed to the drop in figures. Although the DeFi sector has seen a 68% loss in staked funds, Solana experienced a 17.5% increase in staked coins in the reported quarter.
On the other hand, Solana is doing best in the NFT sector, where it continues to set records. New token issuance jumped to more than 7 million a day, a 46.4% increase. The NFT network ranks second after Ethereum in terms of secondary sales. Instagram recently added support for NFT, and the Solana-based Phantom wallet is expected to be included soon.
Despite the overall decline in the cryptocurrency market, the average number of validators in Q2 increased by 19.4% to 1,875. The Nakamoto coefficient rose to 27, compared to a high of 20 in 2021. The network's increased scalability should be good for its stability.
The developers have been hard at work, too. At the end of May, the QUIC feature was launched, enabling the network to stabilise by the end of the quarter. And with the 1.11 update, there'll be a fee prioritisation mechanism that will allow users to increase fees to speed up a transaction within a single application (rather than the entire network, as with Ethereum).
The cryptocurrency market is currently under pressure from a negative macroeconomic environment and the collapse of several crypto projects. Nevertheless, Solana maintains high potential and is already outperforming its nearest competitors in many ways.
StormGain Analysis Team
(crypto trading, exchange and storage platform)