Solana (SOL) fundamental analysis and price prediction 2021-2025

Solana (SOL) fundamental analysis and price prediction 2021-2025

By CryptoSorted | CryptoSorted | 20 Jun 2021


Solana is one of the fastest-growing smart contracts chain capable of processing up to 50,000 TPS (transactions per second) at a fraction of the cost.

In this post, I will be sharing with you everything you need to know about Solana, as well as what I think the price of the SOL coin could be in the next 2 to 5 years.

So without much ado, let's get started.

 

What is Solana (SOL)

Solana is a highly performant, fully secure and decentralized smart contracts blockchain that combines its novel proof of history (PoH) with the proof of stake (PoS) algorithms to achieve high transaction throughput and near-zero transaction fees.

Solana is the only one of the major smart contracts chains that are fully secure and decentralized without sacrificing scalability, speed, and cost-efficiency.

Ethereum is known for its security and provable decentralization but it lacks scalability and transactions are slow and expensive.

The Binance Smart Chain (BSC) came to the rescue with its 3 seconds block confirmation times and sub dollar transaction fees but it's not fully decentralized and thus less secure.

Solana has none of these tradeoffs as it provides developers and users with a fully decentralized blockchain that's fast, secure, and censorship-resistant.

Thus providing the open infrastructure required for building decentralized applications (dApps) for mass adoption.

SOL is the native cryptocurrency that powers everything in the Solana ecosystem.

 

Solana (SOL) fast facts

  • Solana solves the blockchain trilemma problems of scale, security, and decentralization. Why trade one for the other, when you can have them all plus more?

  • Solana can process up to 50,000 TPS

  • The average transaction fee on Solana is $0.00025

  • Solana achieves full decentralization, security, without sacrificing scalability, speed, or cost-efficiency.

  • Solana has a sub 1 second block confirmation time for comparison.

  • There are over 1029 nodes running the Solana blockchain software

  • About 20 billion transactions have been executed on the Solana blockchain so far and still cunting fast as it gains more projects and users.

  • SOL price is up by more than 6000% in the past year as the chain begins gaining traction.

  • SOL has a maximum supply of 488,630,611 coins, more than half of which is already in circulation.

  • You can build on Solana using your favourite programming language such as Rust, C, and C++, with more on the way.

  • The Solana blockchain makes it impossible for miners and bots to reorder transactions and front-run users. Thus allowing for greater security and censorship resistance.

  • There are currently about 188 (and counting) projects building on Solana.

  • There currently about 147 developers contributing to the Solana chain development

 

The Solana (SOL) team

Solana was founded in 2017 by Anatoly Yakovenko.

As an open blockchain, the project is maintained and continually being developed by the community of developers, token holders, validators, and members supporting the protocol.

However, the Solana foundation constitutes the projects core team which is responsible for overseeing the development of Solana.

The Solana Foundation is a not-for-profit organization operating in Geneva, Switzerland. Its mission is to build, support, and grow the Solana network and its community while driving mass adoption for blockchain.

Anyone, including you, can support the chain by building on it or applying to support the core team through community and marketing efforts.

 

Solana core features

How does Solana blockchain full decentralization without sacrificing security and scalability?

Solana's efficiency is attributed to the following 8 core innovations.

  1. Proof of History (PoH)

  2. Tower BFT

  3. Turbine

  4. Gulf Stream

  5. Sealevel

  6. Pipeline

  7. Cloudbreak

  8. Archivers

1. Proof-of-History (PoH)

Its novel proof-of-history (PoH) helps to create more efficiency and a high transaction throughput rate.

The PoH orders blockchain transactions in hashes which ensures that validators only have to process and transmit a smaller amount of information in each block.

Thus saving the space and time it takes to execute a transaction on the network.

2. Tower Byzantine Fault Tolerance (TBFT)

TBFT is a PoH-optimized version of the Byzantine Fault Tolerance (BFT) which was made to take advantage of the synchronized clock.

The Tower BFT uses the PoH as its cryptographic clock which allows consensus to be reached without having to incur massive messaging overhead and transaction latency.

3. Turbine

The Turbine protocol helps Solana achieve bandwidth usage efficiency and increases its capacity to settle transactions faster.

It makes it easier to transmit data to the blockchain nodes by breaking on-chain data into smaller packets to conserve network resources required to propagate data to the blockchain nodes.

4. Gulf Stream

The Gulf Stream is a mempool-less transaction forwarding protocol that plays an important role in pushing transaction caching and forwarding it to the edge of the network.

Thus allowing the validators to execute the transactions ahead of time, reducing confirmation time, faster leader switching, and reduced memory pressure on validators from unconfirmed transaction pools.

The Gulf Stream protocol is what enables Solana to be able to process up to 50,000 transactions per second.

5. Sealevel

Sealevel highly efficient transaction processing engine that allows Solana to process transactions concurrently on a single state blockchain.

6. Pipeline

The Pipeline mechanisms allow transaction information on the Solana chain to be quickly validated and replicated across all the nodes in the network.

7. Cloudbreak

Cloudbreak is a data structure that is optimized for concurrent reading and writing of data across the Solana network.

8. Archivers

Archivers are used for data storage. Data on Solana offloads from validators to a network of nodes known as Archivers.

These nodes can be lightweight (ex: laptops) and they will be subject to a check, every so often, to ensure they are storing the right data.

 

The Solana community

The Solana community is a globally distributed home to developers, token holders, validators, and members supporting the protocol.

A project's community consists of its investors, partners, developers, and relevant industry stakeholders.

The Solana community is growing stronger and larger by the day as more projects build on the network and users from other chains discover its many advantages.

Solana has some of the fastest-growing community members with currently over 80,000 Telegram group members, about 18,000 Discord members, 265,000+ Twitter followers, and 16,900+ Reddit subscribers.

More so, the number of projects building on Solana is rising fast. As of today, a total of 189 projects have been launched and building on Solana.

 

The Solana (SOL) coin

SOL is the native cryptocurrency that powers the entire Solana ecosystem.

The coin has a maximum supply of 488,630,611 with over 50% of that (272,637,122) already in circulation according to data from CoinGecko.

SOL coin use cases

The following are the use cases of the SOL coin.

  • SOL is used to pay for all transaction fees on the Solana blockchain

  • SOL is used for staking by users and validators to earn rewards

  • SOL is a governance coin that empowers holders to propose and vote for proposals making to help shape the future of the Solana chain.

As of the time of writing this article (June 18, 2021) the Solana on-chain governance system is still in development but is scheduled to be live soon.

 

Solana (SOL) price predictions 2021-2025

This same time last year (2020) the SOL coin was exchanging hands for about $0.5. Today it's over $37 after crashing by more than 35% from its all-time-high (ATH) price of $58.03 in the last bull run.

That's over 6000% gains year-to-date (YTD), but the coin is still extremely undervalued by my evaluation.

SOL price prediction 2021

SOL has an upper limit price of $80 before the end of 2021. How did I come about this price? It's simple.

First I believe that Solana (SOL) should not have a marketcap below $25 billion because it's a functional and arguably superior smart contracts chain.

If Cardano with no smart contract capability (yet) could achieve a $46 billion market valuation and XRP that nobody is using is worth over $37 billion, there's no reason for Solana to close the year with its current $10 billion + marketcap.

Secondly, the chain is fast attracting both users and developer building on it. And at the current level of development, a 3x to 5x price action by the end of 2021 is absolutely feasible.

Governance is yet to be activated and it will be in 2021. Several projects are being launched on Solana. What could possibly go wrong with a 5x price move from here?

SOL price prediction 2022-2025

My most conservative price prediction for the SOL coin between 2022 and 2025 is $205.

That is assuming a modest mark cap of $100 billion and that the entire supply would be in circulation within this period.

The bull run that will follow the 2024 Bitcoin halving will be a major catalyst for this growth regardless of what happens between now and then.

Even under the current bearish sentiment, the SOL coin has been relatively stable. While other major coins and tokens including BTC are down by more than 50% since the market began crashing in mid-May, SOL is is only down by 36%.

This relative stability is due to the increasing demand for the coin as its ecosystem grows with new projects and users.

 

Conclusion

“Basically, the speed of light is how fast we can make this network go,” ~Yakovenko.

Solana is fast, secure, fully decentralized, and offers near-zero transaction fees.

Though there's a slower influx of new projects building on Solana, that's because Solana is not an Ethereum compatible chain where any dick and harry developer could simply fork any existing Ethereum or BSC project code and launch their own in under 24 hours.

Projects building on Solana are building from scratch, as such, it takes more time to launch and the rate of scams, rug pulls are significantly lower because most scammers have no time to build from scratch.

Therefore, while it may seem that Solana is growing slower than BSC, Polygon and the like did when they picked up in reality it's moving extremely fast, especially when you compare it to Cardano which is doing the same thing.

Solana has all the strengths of both Ethereum and BSC combined with none of their weaknesses. As such I consider it a more superior chain to existing competitors, suitable for all types of DeFi traders and investors.

 

What do you think about Solana? Do you think $80 by end of 2021 and $205 price per SOL coin between 2022 and 2025 is realistic? Share your thoughts with us in the comments section below.

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