Solana, a protocol that leverages the blockchain’s permissionless design to offer DeFi solutions, has become an internet sensation after the impressive performance of its native token, Solana (SOL). The coin has gained more than 13,000% since the year began, becoming a favorite investment for many in the crypto space. As a result, the coin surged as high as $214.96 yesterday, setting a new all-time high.
However, SOL failed to maintain the bullish momentum and plunged as low as $181.45 before recovering slightly to close the day trading at $188.20. At the time of writing, SOL is changing hands at $181.28 after losing 12.61% in 24 hours. Nonetheless, SOL is up 32.80% over the last seven days and is the only coin in the top-10 that is green regarding weekly performance.
As a result of this consistent, strong performance, SOL also scaled the heights in the top-10 list of leading cryptocurrencies. At the moment, SOL is the sixth-largest crypto by capitalization after toppling renowned coins, such as Polkadot (DOT), Dogecoin (DOGE), and Ripple (XRP) in recent weeks.
Factors driving SOL’s astronomical rise
Despite being a relatively new project, Solana boasts features that positioned it for success since its launch in March 2020. For instance, the network leverages a Proof-of-History (PoH) consensus mechanism that can theoretically process 710,000 transactions per second (TPS) when using a 1 gigabit per second network. At the moment, the project handles 1,000 TPS, a rate that is significantly higher than Ethereum’s 15 TPS.
The network is also compatible with smart contracts, a feature that positions it as an Ethereum killer. On top of this, it supports non-fungible tokens (NFTs), which are currently booming. In the past month, an NFT project dubbed Degenerate Apes Academy launched on Solana. It offered NFTs of 10,000 costumed apes at launch, and they sold out in 8 minutes. SOL was the only accepted currency, and this sale helped increase its value.
Solana also charges low fees, with the average transaction cost being $0.00025. In comparison, Ethereum ETH, which is often touted for payments, currently charges $10.14 per transaction. Coupled with a powerful network, low fees have positioned SOL as the ideal cryptocurrency for payments, partially explaining its rise.
According to Scott Melker, a crypto investor that goes by The Wolf of All Streets of Twitter, Solana is a legitimate competitor to ETH because it offers lightning-fast transactions at a fraction of the cost.
Another factor that helped fuel SOL’s growth was the funding round in June, which saw Solana Labs secure $314 million from investors like Andreessen Horowitz and Polychain Capital. With these funds, the project sought to build an expansive DeFi ecosystem. Reportedly, the investors in this funding round got SOL instead of traditional equity shares.
Solana also announced a hackathon event dubbed Ignition, which offered developers a chance to win various rewards for building projects on its network. Ignition went live on August 31 and is set to run until October 8. Through this hackathon, Solana’s technology stands to get more adoption.