The cryptocurrency had an incredible run in the third quarter of the year. This bullish run saw it overtake Doge as the 7th most valuable cryptocurrency by market capitalization for a brief period.
What is Solana
Solana the native token for the open-source blockchain of the same name. The highly functional blockchain is part of the networks categorized as Ethereum-killer because they have smart contract capabilities just like Ethereum. This group of blockchain networks, including Cardano, Terra, Polkadot, HEX, etc., all claim to be an alternative to the Ethereum network. As a result, they offer lower fees, faster transactions, and more scalability.
Solana blockchain combines a Proof of History and Proof of Stake consensus model to improve its scalability. Given its comparison to Ethereum, users can build and deploy decentralized applications. The Solana token is fundamental to the operation of the blockchain. It has a total supply of 489 million tokens, with 260 million already in circulation.
Solana Rapid Growth
In September 2020, Solana was worth only $3; one year later, it’s trading at $137. While the crypto market value generally increased this year, Solana is one of the tokens that have seen substantial gains. It is one of the standout tokens in the crypto surge that started in late July. Between August and October, the token had a bullish run that made it enter the top ten Cryptocurrencies by market cap before climbing even higher, going as far as flipping XRP which was 6th at that time. It reached an all-time high of $214.96 on September 12. While it has since dropped substantially in value and shed some of its gains, it’s still very valuable considering that it was only $36 at the beginning of August and remained one of the Cryptocurrencies with the most gains so far this year.
What is Responsible for Solana Rapid Growth
The rapid growth of Solana isn’t accidental, and neither is it because of the hype. It’s as a result of its use cases. Interest in smart contracts, NFT, and Defi offerings have grown significantly this year, which means investors focus more on platforms capable of providing this capability. Given the challenges of using Ethereum, many users are looking for alternatives, and Solana has proved to be a worthy option.
Solana is now home to over 400 decentralized projects, and its Defi market is worth over $3 billion. While this is small compared to Ethereum, it’s still substantial and will only keep growing.
Another factor that also influenced its rapid rise is the launch of the Degenerate Ape Academy on Solana. This NFT, a collection of 10,000 cartoon apes, was built on the Solana blockchain and launched on August 15. It sold out in less than ten minutes. The true impact of this NFT launch is that it tested Solana scalability, and the blockchain passed. So far, Ethereum has a monopoly on the NFT marketplace. But with Solana proving its capabilities, interest in it will only keep growing.
Solana VS XRP: A Tale of Two Tokens
While Solana has been having a good year so far, the same can’t be said for XRP. This isn’t surprising, considering that there’s a vast difference between Solana and Ripple’s XRP. Their use cases are different, with XRP being part of the overall Ripple protocol ecosystem focused on improving traditional financial systems. But the bigger disparity lies in their price difference.
On January 1, 2021, Solana was trading at $1.86. On the other hand, XRP was trading at $0.23 on the same day. Today, Solana is trading at around $137, while XRP is trading at $0.94. This shows that Solana has seen over a 7000% increase in its value since the beginning of this year. At its all-time high price, the gain has been over 11000% since January. However, for those who invested in XRP at the beginning of the year, the gains so far are only slightly above 408%.
One of the things that limited XRP growth this year is the case against Ripple from the Securities and Exchange Commission. The lawsuit, still in court, makes the future of XRP cloudy as it might be up to the court to decide if it’s a cryptocurrency or security. So, while its value has slightly risen over the past few months, it’s still far from Solana.
Even though XRP currently has a market cap that ranks it on 6th, one spot above Solana, this doesn’t reflect its growth value. Solana growth is likely to continue as more institutional investors and individual users opt for the network. However, Ethereum 2.0, which will address the Ethereum network issues, could affect its growth. But Solana can go beyond just being an Ethereum alternative to becoming its network. It’s on that path already, and its value will keep increasing if that happens.