After a tumultuous 2022, Solana, the once-promising blockchain network dubbed the “Ethereum killer,” is showing signs of recovery. The project, which had lost its main backer FTX, is experiencing growth in the NFT (non-fungible token) and liquid staking sectors, providing hope for the future of its native crypto SOL.
Solana’s journey towards recovery began at the start of 2023, with the NFT and liquid staking sectors driving its progress. The total value locked (TVL) in Solana has increased from 25.12 million SOL to 30.95 million SOL, marking a growth of over 50% in USD. This growth has instilled hope in investors that the bear market is behind them.
The collapse of FTX in November 2022, which was the main backer for Solana’s technology developments, had caused significant damage to the project’s reputation. However, Solana’s team has managed to overcome these challenges by continuing to innovate and achieve major milestones in the NFT market. They have also achieved an impressive 100% chain uptime since the beginning of the year.
The recent partnerships with Shopify and Visa have further boosted Solana’s resurgence. Both companies are developing their services on top of Solana’s decentralized infrastructure, a testament to the credibility of the project.
The liquid staking sector is also thriving on Solana, with strong growth seen in TVL across LSD (liquid staking derivatives) protocols. For example, Jito saw a 62.33% increase in value locked within the application in the past 30 days, while Marinade Finance grew by 20.65%. This highlights the profit opportunities in the niche sector, particularly as only 3-4% of SOLs are staked on Solana compared to around 40% on Ethereum.
Solana’s improvements to its technology stack have played a crucial role in its recovery. One notable upgrade is the Firedancer, which optimizes Solana’s validation client, making it more effective than the current client. The introduction of the “State Compression” solution for NFTs has also significantly reduced storage costs by keeping data off the original chain. This innovation has led to the creation of compressed NFTs (cNFTs) that are highly optimized in terms of data storage. Tensor, a compressed NFT market launched in June 2023, has capitalized on this technology and captured the majority of the market share of collectible cryptographic assets on Solana.
The cost reduction of minting NFTs on Solana is a key competitive advantage for the platform. Without the compression technology, the cost to mint 1 million NFTs would have been $253,000. However, with the state compression, it now only requires $113, a reduction of more than 2,000 times. This cost reduction has made Solana cheaper than Polygon in terms of NFT creation. While Solana still has a long way to go to catch up to Ethereum, which has the most thriving ecosystem and highest fee costs in the market, the recent updates have significantly improved its growth prospects.
In conclusion, Solana is showing positive signs of recovery after a turbulent period in 2022. The growth in the NFT and liquid staking sectors, along with improvements in its technology stack, has fueled its resurgence. Despite the challenges and setbacks, many are still betting on Solana, including institutional investors. The future of the “Ethereum killer” blockchain network remains uncertain, but with its decentralized ecosystem and recent advancements, Solana is on the path to reclaiming its heyday.
