Connect with us

Solana

The power of cheap transactions: Can Solana’s growth outpace Ethereum?

Published

on

The top cryptocurrencies by market capitalization keep changing over time as the industry matures. Solana (SOL) has seen its value skyrocket so far this year and has been consistently processing over 2,500 transactions per second.

The cryptocurrency’s price, according to TradingView data, is up nearly 13,000% year-to-date as the year started with SOL trading slightly below $2. Solana is now changing hands-on exchanges for around $240.

Solana is a blockchain platform that aims to achieve high transaction speeds at a low cost without sacrificing decentralization. To do so, it relies on a number of unique features, including a “proof-of-history” mechanism. This allows Solana to process an estimated 50,000 transactions per second, compared to Bitcoin’s seven and Ethereum’s 15.

As the Solana network supports smart contracts, decentralized finance (DeFi) applications have found a home on it. Its ecosystem now has nearly $15 billion worth of crypto assets locked on it, according to DeFiLlama data.

Advertisement

Speaking to Cointelegraph, Kraken Intelligence manager Pete Humiston noted that almost all crypto assets have benefitted from a year-long bull run, although Solana has seen “particularly strong price appreciation due to its Web 3.0 experience.” 

Humiston added that transactions on Solana are “instant, cost a fraction of a penny and the ecosystem is easy to navigate thanks to user-friendly wallets and applications” contributing to its adoption.

Solana’s adoption may be the result of retail investor demand that was priced out of Ethereum, according to Mindaugas Butkus, chief technology officer of Solana-based decentralized exchange Solanax. He told Cointelegraph:

Advertisement

“Growing demand for DeFi applications and NFTs on Ethereum led to exploding gas fees, which made it expensive to use ETH. Transacting on Solana is inexpensive and transactions are processed in no time, making it an attractive alternative for retail investors.”

Butkus added that Solana’s base-level protocols attracted users for the same reason Ethereum’s DeFi space initially did: flourishing innovation leading to a booming ecosystem with a good user experience.

Is Solana a threat to Ethereum?

As the price of Solana surged, many speculators suggested that SOL will one day overtake Ether (ETH) to become the second-largest cryptocurrency by market capitalization. Solana’s focus on maintaining its decentralization while offering near-instant transactions at a low cost has been a way to attract users, but there’s more to Ethereum than gas fees.

Speaking to Cointelegraph, Adrian Kolody, founder of Domination Finance — a non-custodial exchange focusing on dominance pairs — said he believes there are “too many users vested in Ethereum” for it to be surpassed by Solana.

Advertisement

To Kolody, Ethereum is “a truly decentralized network whereas Solana falls more into the SpeedFi category.” To him, there are idealists that refuse to interact with any ecosystem that isn’t that of Ethereum: 

“Ethereum would have to totally bottle their promises for Ethereum 2.0 over the coming years for Solana to overtake it, and even if that happens, it is still very unlikely.”

To Kraken Intelligence’s Humiston, it’s in the “realms of possibility that Solana could trade inline with Ethereum this cycle if it maintains momentum and grows its developer and user community.”

Humiston added that Ethereum has a “number of tailwinds of its own” that could justify its price moving up further this cycle. To the analyst, this potential price appreciation is “why diversification among the largest smart contract platforms” is worth considering at this point.

Advertisement

Markus Bopp, chief technology officer of no-code nonfungible token (NFT) platform Unifty, told Cointelegraph that he believes Solana has “great potential technically,” and as it matures and developers organically jump onto its network it “could be a good #3.”

Bopp added that “this will take years moving forward,” and right now it’s “a lot easier as a developer to jump on EVMs due to much lower barriers to entry,” concluding:

“Having said that, Ethereum just can’t compete with the speed of transactions on Solana which developers may increasingly look at.”

Jack McDonald, CEO of digital asset custodian Standard Custody & Trust Company, told Cointelegraph that Ethereum will “always have a prominent place in terms of market cap” thanks to its first-mover advantage and “significant network effects.”

Advertisement

McDonald, whose company brought Solana staking to institutions earlier this month, added that Ethereum needs to get its transition to a proof-of-stake consensus mechanism right and “do it smoothly and in a timely manner, as that will fix their gas fee issue.”

Solana’s 17-hour outage

On Sept. 14, the Solana network went offline for roughly 17 hours after enduring a denial-of-service disruption. At the time, Twitter account Solana Status explained a large increase in transaction load to 400,000 per second overwhelmed the network, causing it to start forking.

Advertisement

After Solana’s engineers were unable to stabilize the network, its validator community coordinated a restart that brought it back to full speed. That same day, Ethereum layer-two rollup network Arbitrum One reported its sequencer went offline for roughly 45 minutes.

The attacks failed to affect the Ethereum network, which to Domination Finance’s Kolody was to be expected. Kolody noted that Ethereum is “totally decentralized and it is essentially impossible for the network to completely shut down,” which is “why gas fees can become insanely high.”

Ethereum’s resilience, he said, is part of the reason why it will “always have users and developers building on top of it.” Kraken Intelligence’s Humiston noted the incident was a result of “unprecedented demand” that did not scare away investors.

Advertisement

Humiston further noted that once the network came back online, the price of SOL rallied and returned to levels seen before the network went down. To the analyst, this “suggests investors didn’t see the incident as ruinous to Solana’s overall narrative and value proposition.”

If anything, Humiston concluded, Solana’s price action proved that the market “acknowledges the difficulties in building a globally distributed system and expects growing pains as the network scales, evolves and innovates.” To other experts, however, things aren’t as clear.

A network hiccup?

While most experts seemingly agree that Solana’s 17-hour outage was a small hiccup in a nascent network, others believe it may represent a problem that needs to be addressed before further outages occur.

Advertisement

According to a Solana network explorer, the network has already processed over 39.6 billion transactions and currently processes over 2,300 transactions per second. Part of those transactions may, however, be in part “thousands of critical consensus messages” that all blockchains have but don’t process as transactions.

That’s according to Justin Giudici, head of product at Telos Blockchain, who told Cointelegraph that these processes are “typically handled separately from on-chain transactions via a distinct communications channel — for good reason.”

Per Giudici, Solana’s design approach “results in amazing scalability claims” that are “entirely misleading.” Giudici said that in real terms, a lack of separating critical processes “required for each Solana node to run from the real transaction which prevents the correct prioritization of CPU cycles,” which led to the crash.

Advertisement

Giudici sees Solana’s 17-hour outage as a “serious problem” for the network, as he believes that if Solana sees “enough real transactions,” which he said are estimated to be “as little as 200–300 transactions per second” these can “out-prioritize the functioning of the networks core processes due to lack of separation of concerns in the networks architecture.” 

Interest in Solana keeps growing

Interest in Solana has steadily been growing, as evidenced by its growing DeFi ecosystem that has steadily been supported with the launch of new NFT marketplaces and collections. Its cheap transaction fees make it an attractive alternative for retail investors, although institutions are also keeping an eye on it.

Standard Custody & Trust Company’s McDonald revealed that institutional investors aren’t the only ones interested in Solana. Per his words, the firm has had “tremendous institutional interest” to custody and stake SOL.

Advertisement

Oscar L. Andrade, founder of Solana-based DeFi platform Bancambios, noted high profile projects built on Solana: Reddit co-founder Alexis Ohanian has teamed up with Solana Ventures to launch a Web 3.0 and social project investment fund while Brave founder Brendan Eich announced it will integrate with Solana on its privacy-enabled browser. Andrade told Cointelegraph:

“Reddit and Brave are onboarding millions of users into the Solana ecosystem because they realized it has the potential to help cryptocurrencies achieve mass adoption. Its near-free transactions and instant finality make the use of blockchain technology seamless.”

McDonald predicted the boom will continue as institutional investors continue to invest in Solana and retail investors keep following that trend. Wall Street’s interest in the cryptocurrency has been such that SOL became the third cryptocurrency to hit the Bloomberg Terminal, after Bitcoin (BTC) and Ether.

Solana’s features have indeed been attracting a plethora of users but that’s not all helping it stand out. Its booming DeFi space is allowing retail investors to explore new funding options, decentralized exchanges and nonfungible tokens at accessible rates.

Advertisement

Whether Solana will maintain its status as the go-to platform because of its features, or whether Ethereum 2.0 and ETH’s layer-two scaling solutions will grow to overtake it remains to be seen.

News Source

Advertisement

Solana

$2.6 Billion Bug in Solana Program Library Disclosed: Details

Published

on

Researchers from Neodyme, a boutique team focused on security audits, noticed a critical vulnerability in Solana’s codebase

In their latest blog post, crypto security researchers from Neodyme shared the design of an attack that may be profitable for “expensive” tokens integrated into Solana (SOL) ecosystem.

“One Lambo per hour”

As per the announcement shared in Neodyme’s social network and blog, its members noticed a bug in the token-lending contract of the Solana Program Library. As such, it affected numerous Solana-based DeFi protocols.

Advertisement

Aggregated total value locked (TVL) at risk was over $2,600,000,000. The design of the hypothetical attack was quite simple: while depositing n fractional tokens, a user is able to withdraw n+1 fractional tokens.

With Solana’s native token, SOL, it will not be effective economically, as 1 Lamport (the smallest fraction of SOL, like Satoshi for Bitcoin, Wei for Ether and Drop for XRP) is only worth about $0.000000220.

Advertisement

However, for Ether and Bitcoin, this scenario can be very profitable. With some technical upgrades, the attack can be executed about 300 times per second. In this case, losses can be dramatic:

We can get this transaction included about 300 times per second, stealing $7500 per second or about $27 million an hour (that is one Lamborghini Huracan every minute).

Bug fixed

In automated mode, this attack becomes profitable even for FTT and RAY tokens.

On Dec. 2-4, Neodyme’s representatives contacted a number of decentralized finance protocols (DeFis) on Solana, e.g., Larix, Solend, Tulip, Accumen, Soda and so on.

Advertisement

All teams fixed the bugs in their architecture. Yesterday, software engineer Jordan Audet-Sexton shared in GitHub that the issue is fixed in Solana’s main codebase as well.

News Source

Advertisement
Continue Reading

Ethereum

Here’s What’s Next for Ethereum Rivals Solana and Avalanche, According to Analyst Nicholas Merten

Published

on

Prominent crypto analyst Nicholas Merten is taking a look at two layer-1 digital assets stacked up against the Ethereum (ETH) trading pair.

In a new strategy session, the host of DataDash tells his 486,000 YouTube subscribers where he thinks smart contract platforms Avalanche (AVAX) and Solana (SOL) are headed.

According to Merten, it is better to compare both coins to ETH rather than the US dollar or Bitcoin (BTC) as Ethereum’s greater success in recent years makes it a better barometer than Bitcoin.

Advertisement

“If you’re really looking to see if your play is outpacing others in the market, you want to take a look against Ethereum. It is the second-largest cryptocurrency in this space and it has been outpacing Bitcoin around 380% to 400% in this cycle alone since 2019.

So we want to be able to find plays that are outpacing Ethereum because Ethereum is a really solid bet. It’s a really good medium-risk, medium-reward play.”

Source: Nicholas Merten/YouTube

Looking at Avalanche, Merten says that a local top might be in for the AVAX against ETH after the altcoin’s massive rally in the last few months.

“Avalanche has done phenomenally well against Ethereum. If you take a look back here since August, it’s up 422% against Ethereum. Great rally, even after the [recent] pullback here…

Advertisement

When I look at this chart I definitely like seeing an asset that performs well against Ethereum, but each time it’s come up to this range [0.034 ETH or $139.21] historically, it’s been dragged down…  

I think that again we might see some kind of repetition, or at least a revisit down to the previous support range [0.014 ETH or $57.32], which means that’s it probably going to go down a little over 35% to 40% against Ethereum. A pretty decent decline.

At time of writing, AVAX is down 1% on the day to $107.20.

Advertisement

As for Solana’s price action against Ethereum, Merten notes that the pair is flashing a bearish pattern after printing massive rallies in the last 18 months.

But to be completely frank as a trader, Solana’s had many rallies in the past. It’s had one back here [from July to August of 2020], 336% rally in price. Then back here [December of 2020], if you want to take from the lows, in this case, 1,000% move, massive multiples in price.

We take a look here as well, from the recent rally here [August 2021] into September, very similar to history, a little over 350% to 400%. Not a bad rally.

Advertisement

But to be completely frank, we’ve been stagnant since September generally. The trend is starting to fade here. We don’t have that same momentum, and it’s seeing if it can hold out against Ethereum.

If you break below this range here [0.046 ETH or $188], I think it’s very favorable that Ethereum is going to start to outpace Solana as well as other major layer-1 plays.”

Source: Nicholas Merten/YouTube

Solana is currently down nearly 10% and trading at $203.79.

News Source

Advertisement
Continue Reading

Solana

Solana Price Analysis: SOL spikes to $170, swift retracement to follow?

Published

on

  • Solana price analysis is bullish today.
  • Rejection was seen at $170.
  • SOL/USD set to retrace previous loss next.

Solana price analysis is bullish today as further downside was rejected at $170 after a strong decline over the last 24 hours. Therefore, we can assume SOL/USD has set a new low, and recovery will be seen over the next 24 hours.

Solana Price Analysis: SOL  spikes to $170, swift retracement to follow? 1
Cryptocurrency heat map. Source: Coin360

Overall, the cryptocurrency market has seen a strong decline over the last 24 hours. The market leaders, Bitcoin and Ethereum, have seen a strong decline of 16.94 and 14.65 percent, while Solana (SOL) has lost around 19 percent.

Solana price movement in the last 24 hours: Solana drops further, finds support at $170

SOL/USD traded in a range of $181.46 – $239.12, indicating extreme volatility over the last 24 hours. Trading volume has increased by 75 percent, totaling $6.48 billion, while the total market cap trades around $58.9 billion, ranking the coin in 5th place overall.

SOL/USD 4-hour chart: SOL looks to recover? 

On the 4-hour chart, we can see bullish momentum returning for the Solana price action today as bears are finally exhausted.

Solana Price Analysis: SOL  spikes to $170, retracement to follow?
SOL/USD 4-hour chart. Source: TradingView

Solana price saw strong bullish momentum push the price higher for most of the week after support was found around $185 last weekend. However, yesterday, SOL/USD peaked at $244, leading to a drop lower during the second half of the day.

Overnight, bearish momentum continued pushing lower, with the $185 previous low broken. Further downside followed in the morning as bears briefly touched the $170 mark.

Advertisement

However, from there, a quick reaction higher was seen this morning and is currently still in play. Likely we will see the Solana price action continue higher later in the day, as bulls are eager to regain some of the loss seen earlier.

Solana Price Analysis: Conclusion 

Solana price analysis is bullish today as we saw quick rejection from the $170 mark this morning. Therefore, a new swing low has been set, likely leading to recovery over the next 24 hours.

While waiting for Solana to move further, see our articles on the Best Crypto Wallet 2021, Decred Wallet, and Ripple vs SEC.

Advertisement

News Source

Continue Reading