Solana (SOL) has risen a lot in the last 24 hours and has an incredible rally behind him. In higher timeframes, the cryptocurrency records a gain of 70% and 141% on the 7-day and monthly charts.
Solana, one of Ethereum’s potential killer ecosystems, continues to grow and attract the attention of the crypto space. DeFi investor Daniel Cheung recently published a report on the fundamentals supporting a further rise in the SOL price.
Cheung believes that this cryptocurrency offers one of the” best “risk-return scenarios for all crypto investments and predicted the arrival of the” Solana summer”. This project has a simple pitch due to its high scalability and cost-effective smart contract platform.
In addition, Solana (here to our forecast) offers a high degree of scalability in an ecosystem without solutions such as sharding. Cheung is of the opinion that these properties of the Solana-based application enable a “synchronous compositional capability”.
This is important because with a single common state and synchronous composability, any application on Solana can communicate with each other atomically.
As Ethereum pushes its migration from a proof-of-work consensus algorithm to a proof-of-stake algorithm, the DeFi ecosystem could lose this property. This, in turn, could lead to some applications being less interoperable or not working at all.
The bearish case for Solana: what could prevent further gains
The Solana Foundation has introduced pools to increase the security of its network, make it more resistant to censorship, and provide more incentives for Solana owners to participate in the ecosystem.
The latter, along with the centralization of the network, was one of the main criticisms for many. Cheung believes that this is part of the pessimistic thesis for Solana. This means that the network will never be sufficiently decentralized in the future.
The second part that could prevent the ecosystem from gaining further traction is Ethereum itself. The competitor still supports the majority of DeFi projects, has a high number of developers working on dApps and the ecosystem or second-layer solutions.
According to Cheung, Solana has ” a steep fight against Ethereum ahead of her.” However, DeFi is one of the sectors where it is more visible, as the crypto industry is still in its early stages and could inevitably be heading towards a “multichain world”, as Cheung calls it. He adds:
“It is still unclear whether smart contracts will be a”winner-take-all” market. While Ethereum is currently in the lead, the data increasingly points to a multi-chain future, at least for the foreseeable future in which this market will develop.“
Regarding the issue of centralization, the investor says that there is a lot of discussion about when a blockchain has the right level of decentralization. Cheung estimates that 1,000 or 10,000 nodes (nodes) could be enough to make the criticism of this network “obsolete”.
Important personalities involved
The data provided by the investor states: the development activities in the SOL ecosystem show” a very good trend ” and are accompanied by the increase in prices. This trend seems to continue in the coming months as key figures in the crypto space, such as FTX CEO Sam Bankman Fried, are “heavily involved” in Solana.
Cheung claims that Bankman Fried has made serious investments in this ecosystem. The exchange and its CEO have made external investments in traditional finance, sports and the consolidation of partnerships with other investors, politicians, celebrities and others.
Therefore, Wall Street institutions are eager to participate in Solana and its ecosystem. Cheung’s conclusion:
“With the bear arguments lapsing, there remains an asset that offers one of the best R/R ratios in the crypto world at the moment, offering virtually unlimited upside potential in a bubble, considering that it is compared to ETH, which is traded as if it were going to become the reserve currency of the Internet.“
Text credits: Newsbtc
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