The cryptocurrency Solana (SOL) has been able to multiply its value in recent weeks. Here are 5 reasons for this-and why the rally could go even further.
Solana-the Ethereum killer?
The smart contract platform Solana (SOL) is one of the most successful coins of recent weeks. Even in the market-wide downturn, SOL was able to assert itself bravely and only had to endure a very short-term correction. Since then, however, the SOL bulls pump the cryptocurrency again enormously: No less than 75% SOL has risen within the past week, in the last 24 hours it was still almost 25%. Solana seems unstoppable-and popular crypto analyst Lark Davis explains why in a new video analysis on SOL.
Davis cites five factors responsible for the Ethereum competitor’s epic rise. Factors that could continue to cause Solana to gain massively in value – and potentially make SOL the Ethereum killer (at least when it comes to the SOL bulls).
The popular industry observer comments: Solana is facing such an increase because of increased developer activity on its blockchain. Davis:
“Solana is definitely not a ghost town. We have built a lot of applications on Solana that you can use now, today.“
As an example, Davis cites Port Finance (PORT). This is a competitor of the top DeFi protocol Aave. Another top project on Solana according to Davis: Mercurial Finance (MER). MER is comparable to Curve Finance from Ethereum – a stablecoin swapping protocol. In addition, a popular project on Solana, according to Davis, is Radium (RAY) – the decentralized exchange (similar to Uniswap, UNI).
The next growth factor for Solana: the NFT boom. Davis:
“NFT has been a massive trend lately. Solana also has a lot of NFTs.“
And that is an important part of what drives SOL demand. People would buy the SOL token because they want to buy NFTs on Solana – and the digital collectibles are priced in Solana.
Solana has plenty of capital
The solid financing of the project is also a major contribution to Solana’s rise, according to Davis. Background: Solana was able to raise $ 314 million through a private token sale in June. That’s ample capital to expand the ecosystem, as Davis explains:
“One reason that so many developers are now committed to the SOL ecosystem is that they are getting money. They receive grants. You get a lot of investment.“
In addition to the 314 million dollars of capital comes support from the major crypto exchange FTX.com. According to Davis, this is something like”having more money than God.”
The penultimate factor behind Solana’s strong price increase: the entry of institutions. Major industry participants are starting to keep an eye on the Ethereum competitor-or have already invested. For example, Osprey Funds, one of the leading cryptocurrency investment firms, announced a Solana fund two weeks ago. According to Davis, Osprey is “by far” not the only big spender pumping capital into Solana.
Finally, Davis cites TVL (“Total Value Locked”, the total value of capital tied up in the Solana ecosystem). That has risen to over five billion dollars – and will continue to grow, according to Davis. Among other things, the analyst cites the fast-growing DeFi sector in the Solana ecosystem as a driver. This offers advantages over Ethereum, for example, because the transaction fees are significantly lower.