This year saw multiple changes in the list of top 10 cryptocurrencies by market cap. Some coins shifted in and out, while others appear to have made a permanent spot for themselves – including Solana (SOL). A stable, long-term project that began reaching maturity this year, Solana solidified at the number 5 spot. Growth within the Solana ecosystem and an increasingly finalized platform allowed for this move. Despite this, some persistent investor questions remain unanswered.
As can be expected for a top blockchain, Solana now faces the combined struggle of increased traffic as well as focused attention from malicious actors. Touting their massive transaction-per-second speed, Solana faced the embarrassing prospect of a DDoS attack – which ultimately brought the blockchain down for several hours. Working through these hardships is a matter of course for larger blockchain projects, but how they respond often exposes greater problems within the platform.
Questions Regarding Decentralization
A purported pillar of the cryptocurrency industry lay in the concept of decentralization. Most long-term cryptocurrency investors expect a project to maintain a certain level of decentralization. This, theoretically, prevents widespread fraud and damage enacted by the owners and developers of any given blockchain. In reality, all projects feature some degree of centralization and depend on that fact for upgrades and fixes.
Solana is no different, and the DDoS service outage supposedly occurred due to the Solana Foundation disabling the blockchain for up to 17 hours to analyze and stop the DDoS attack. Their response was prudent, given the event itself, but caused many investors to question the power that the Solana Foundation holds over their blockchain. Yet, in the immediate aftermath, Solana also saw a spike in project development – proving that many developers and investors do not mind the centralized aspects.
Profiting from Ethereum Woes
Solana’s founder, Anatoly Yakovenko, is quick to point out that he does not see Solana as a direct competitor with Ethereum. Despite his declaration, Solana and Ethereum display overlapping purposes. As on-chain development grows on Solana, given their recent move up the market cap ladder, users can expect some degree of migration from ETH over to SOL. Particularly given the increasingly unworkable network fees on the original smart contract platform.
While updates continue, and Ethereum has made progress, their slow march towards Proof-of-Stake increasingly damages their ability to compete in the larger blockchain ecosystem. Brand awareness and first-mover status certainly remain strong, but may become irrelevant – small-scale users often face fees higher than their principal investment, simply to transfer funds. If these problems are not rectified, Ethereum’s woes may become Solana’s gain.