Is Solana gonna make it?

Some views on the current situation and future of $SOL after FTX

December 14, 2022

In 2021, among large cap coins, $SOL was surely one of the top performers

It was $1.8 per $SOL in January 2021, and reached ATH of c.$250 per $SOL. A clean 140x on the investment. Will it be back in the coming years?

MAIN CATALYSTS AND NARRATIVES OF ITS RUN IN 2021

  1. Super fast and cheap transactions, compared to expensive gas fees in ETH which in bull market where unsustainable for small investors

  2. Solana NFTs become widely popular and experienced crazy growth in term of users

  3. Total Value Locked (TVL) reached >$10bn

  4. Highly backed by the funding of FTX Ventures / Alameda and other VCs

1./2. FAST AND CHEAP + NFTs

Key was making NFTs attractive to the average (small) investor

  • While on ETH you had to pay >$100 gas fees, effectively making investment of small size not worth it, $SOL transactions were very cheap and fast

  • This contributed to create an alternative market to ETH NFTs, and $SOL NFTs soon became the unique realistic challenger to $ETH

  • Some projects also went mainstream, generating crazy hype

    • @Stepnofficial for some months seemed printing nice money for walkers, and contributed to sustain $SOL price as sneakers and transactions were based on $SOL network

  • Unfortunately, general NFTs interest (not only on $SOL) has gone down a lot recently, and transaction numbers has been following

3./4. TVL + FTX Backing

Regarding TVL, you can see in the chart below the evolution. A peak of $10bn in October / November 2021 and went down to $300m now

  • ATH was reached because many protocols switched from $ETH to $SOL as it was more attractive for the average small investor

    • Moreover, rise of DeFi and backing from FTX Ventures / Alameda to many project in the $SOL space contributed a lot to TVL

  • The TVL decrease from $10bn to $300m (97% decrease) was of course due to extreme market conditions as well as the blow up of FTX / Alameda, which were the main supporters and backers of the $SOL ecosystem

  • Price has followed: the below is a chart we saw on thousands of coins in this market

  • It will be difficult to build confidence and narratives again to sustain a new run

IS SOLANA GONNA MAKE IT?

We outlined the rise & fall of $SOL and how this was caused by broader market movements, negative news, FTX bankruptcy etc.

Is $SOL gmi? Which factors will contribute to make it run again?

There are several factors to be taken into account which suggest us that $SOL is not dead and can come back

#1: DEVELOPEMENT ECOSYSTEM

  • $SOL has the most developers among L1 blockchains after Ethereum

  • $SOL is also 4th from a repos amount perspective

  • On Github you can check the activity as well: many new repos are updated on daily basis: https://github.com/search?q=solana&type=

#2: SOLANA NFTs ENVIRONMENT IS STILL VIBRANT

Solana has executed the same number of $ETH transactions so far: number slowed down a bit, but still aligned with $ETH

  • NFTs volume (in $SOL terms) is experiencing growth, meaning that interest in $SOL NFTs is still there

  • This is mostly driven by MagicEden, which is confirmed as main marketplace on the blockchain

#3: DAILY ACTIVE ADDRESSES

  • Daily active addresses numbers are showing resiliency, and numbers are still better than all comparable projects

  • This demonstrate activity on the blockchain and interest in the community

#4: PARTNERSHIP WITH BIG PLAYERS

  • If FTX left the space, other big players are now supporting the ecosystem

  • Google has partnered with @aeyakovenko ($SOL co-founder)

    • Details are still TBD, but this might be huge in future

#5: HIGH THROUGHPUT AND TPS

  • Solana has maintained solid and consistent numbers in terms of TPS (transaction per second)

  • This is crucial for $SOL, as main characteristics which contributed to its growth were that it was FAST and CHEAP

#6: PRICE ACTION: SOMETHING THAT WE HAVE SEEN ALREADY?

  • Suggestive chart below: $SOL has been following $ETH in last bull cycle

    • Not very insightful, but still interesting

#7: COOL NEWS INCOMING: WEB3 PHONE / DECENRTALISED APP STORE

  • Solana “Saga” smartphone is slated to launch in 2023

  • Solana is also expanding development opportunities for blockchain apps, with the aim of finally integrating smartphones into the Web3 world

  • This mean main goal is developing a decentralized “app store” which could be very interesting

  • Not sure how this will end up, but could be very interesting for the space

#8: ALAMEDA UNLOCKS: EASY TO FRONT RUN

  • $SOL provides full transparency on Alameda unlocks

  • You can keep yourself updated to front run potential dumps on the market

  • Website is updated live: https://solanacompass.com/alameda 

TL,DR

Bad:

  • Loss in confidence

  • Alameda can dump more (you can track unlocks tho)

  • Loss of biggest supporter

Good:

  • Developers still very active

  • NFTs ecosystem is strong

  • Daily active addresses numbers resiliency

  • Main feature (high TPS) still there

  • Price action resembles $ETH

  • Incoming cool news + partnerships

  • You can easily protect yourself from Alameda dumps

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