Solara (GROUND 6.11%)) was launched on March 24, 2020 with an initial parts offer of $ 0.22 per token. Today, it is negotiated at $ 164 – so an investment of $ 100 was worth around $ 75,000 today. This gain of 74,900% was fueled by the growth of its ecosystem to develop decentralized financial applications (DEFI) and non -failing tokens (NFTS), its speed and scalability and the growing number of fintech and Solana Pay electronic partnerships.
However, some investors expect Solana’s price even more. Vaneck, who submitted the first American request for a Solana Stock Exchange (ETF) fund last year, plans that its price increases from 1850% to more than $ 3,200 by 2030 in its Taurus case scenario. Let’s see why the investment company expects Solana to join, and if investors should buy the token before it warms up again.
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Why has Solana climbed in the past five years?
As EthereumSolana’s blockchain uses a mechanism for proof of evidence (POS) to validate its transactions. This approach consumes less energy than the work proof mechanism used to exploit BitcoinSince his tokens are not jealous (locked up for interest -shaped rewards) instead of being extracted. POS blockchains also support smart contracts, which are used to develop decentralized applications (DAPP) and other tokens.
Many developers have launched new tokens on Ethereum’s blockchain, but Solana operates its own independent blockchain. He differentiates himself from his competitors by improving his own POS blockchain with a mechanism of proof of owner history (POH), which helps him treat transactions at much faster speed than the blockchain of layer 1 of layer 1 of Ethereum.
Solana has a theoretical maximum speed of 65,000 transactions per second (TPS), compared to the theoretical speed of Ethereum of 30 TPS for its layer transactions 1. But for real world transactions, which are confronted with network congestion and other limits, Solana has an average daily speed of 1,436 TPS – compared to the daily average speed of Etherum of 19 TPS.
This high speed makes Solana a popular blockchain to develop DEFI applications and non -buttons (NFT). At the beginning of 2022, its developers launched Solana Pay, a payment protocol open to Peer-to-Peer which allowed merchants to accept the stablescoins, Solana and other tokens based in Solana at high speed with costs close to zero. Visa,, ShopAnd other companies later joined Solana Pay in their digital portfolios and their electronic commerce ecosystems.
The Bull affair for Solana
Vaneck’s prospects in 2030 for Solana have a price target of $ 9.81 in its bears case scenario and a goal of $ 3,211.28 in its bull case scenario. Its “basic” estimate only sees Solana doubled about $ 335 per token over the next five years.
Its case of a bull is based on the expansion of the Solana DEFI ecosystem and increased growth in users. Solana only serves about 1.5 million daily active users (DAU), according to Artemis Analytics, but Vaneck thinks that its user basis could extend to more than 100 million DAU because it hosts more bonds, metovers, social, game and infrastructure.
Vaneck admits that the realization of this explosive growth would be based on “killer applications” which ultimately transform Solana into a general public platform for the treatment of digital transactions. But he also warns that the accommodation of an application with more than 100 million users on his blockchain would push his scalability “to its limits”. Any congestion would also reduce the speed of its transactions, but the planned upgrade of Solana Firedancer this year could appease some of these concerns.
Another potential catalyst could be the approvals of the first ETF Solana. These announcements could stabilize its price by attracting more retail and institutional investors. The drop in interest rates could also bring more investors to Solana and other cryptocurrencies.
The case of the bear against Solana
The case of Vaneck Taurus for Solana is very speculative, but the case of bears is simpler. Solana is an inflationary token without maximum supply, so its value will always be pinned to the growth of its developer ecosystem instead of its rarity. It impresses its developers with the speed of its unique POS / POH mechanism, but it always faces a difficult competition from layer 2 rollers of Ethereum, which bring together its transactions and treat them out of the chain at real speeds of 1,000 to 4,000 TPS. Unlike Ethereum, Solana is not compatible with other blockchains, and its Rust and C developer languages have a more steep learning curve than the solidity of Ethereum.
So, even if an “killer” application finally arrives, it could be launched on Ethereum instead of Solana. All of these challenges could retain Solana over the next five years.
Should you buy Solana?
The owner mechanism of Solana, the speed and low costs will help him to remain more relevant than other blockchains in the predictable future. But it is simply not such a convincing investment as Bitcoin, which is appreciated by its rarity, or Ethereum, which remains the best blockchain developer. So for the moment, I was holding on these two blue cryptocurrencies instead of trusting too much in the case of Vaneck bull for Solana.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin, Ethereum, Shopify, Solana and Visa. The Motley Fool has a policy of disclosure.
