With a market cap of $37 billion, Solana ( SOL 0.64% ) is the sixth-largest cryptocurrency with a price increase of almost 15,000% since its launch in 2017. The fast-growing asset is still in its early stages of reaching its long-term potential.
This cryptocurrency is one of several next-generation cryptocurrencies being dubbed “Ethereum killers” because of their ability to disrupt the blockchain technology. Ethereum revolutionized the crypto industry by introducing decentralized applications (dApps), which are self-executing smart contracts that offer services on the blockchain. By providing industry-leading scalability, Solana takes things to the next level.
As opposed to Ethereum’s 15 transactions per second, Solana can handle 50,000, and is cheaper to use, with an average transaction fee of $0.00025 as opposed to Ethereum’s $2.40. Solana achieves this through its innovative technology.
Solana’s proof-of-stake (PoS) system is more user-friendly than Ethereum’s cumbersome proof-of-work (PoW) system where miners solve computational puzzles to update the blockchain.
PoS systems require miners to verify transactions by locking up tokens they own (staking) in exchange for newly minted coins. Solana has a proof-of-history (PoH) system on the blockchain that speeds up the verification process by storing timestamps on the blockchain.
Solana is revolutionizing decentralized finance
In particular, decentralized finance (DiFi) dApps, which are financial services that are operated on the blockchain without a centralized intermediary, such as a bank or broker, have contributed to the platform’s growth.
The speed of Solana makes it ideal for DeFi. From decentralized exchanges such as Serum (allowing users to buy and sell cryptocurrencies on the blockchain) to decentralized banks such as Oxygen, which provides users with a way to store value and earn interest on their deposits, the platform has attracted a wide variety of projects. With a total value locked (TVL) of $7.4 billion, Solana is the fifth-largest DeFi ecosystem based on the sum of all assets deposited in its DeFi-related applications.
Solana Labs, the developers of Solana, aren’t focusing just on on-chain finance. In addition, Solana has developed a project called Solana Pay, which facilitates the use of Solana’s native token, Sol, and other cryptocurrencies for online shopping through a convenient user interface. Using Solana’s technical capabilities to power real-world applications could be a first step.