Solana Near $70 Why It Could Run Hotter In The Coming Months

Solana Near $70 Why It Could Run Hotter In The Coming Months

Business
August 16, 2021 by mvp00
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Up almost 20% in the past 24 hours, Solana (SOL) has been on an incredible rally across the board. In higher timeframes, the cryptocurrency records a 70% and 141% profit in the 7 day and monthly chart. SOL on a rally in the daily chart. Source: SOLUSDT Tradingview Perceived as one of Ethereum’s potential killer
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Up almost 20% in the past 24 hours, Solana (SOL) has been on an incredible rally across the board. In higher timeframes, the cryptocurrency records a 70% and 141% profit in the 7 day and monthly chart.

Solana SOL SOLUSDT
SOL on a rally in the daily chart. Source: SOLUSDT Tradingview

Perceived as one of Ethereum’s potential killer ecosystems, Solana continues to grow and attract attention from the crypto space. DeFi investor Daniel Cheung recently published a report on the fundamentals that support further appreciation for SOL’s price.

Cheung believes this cryptocurrency offers one of the “best” reward/risk scenarios for any crypto investments and predicted the arrival of the “Solana Summer”. This project has a straightforward pitch due to its high scalability and low-cost smart contract platform.

In addition, it provides a high level of scalability in an ecosystem without solutions such as sharding. Cheung believes that these features allow the application build on Solana to have “synchronous composability”.

This matters because with a single shared state and synchronous composability every application on Solana can communicate with each other atomically.

As Ethereum moves forwards with its migration from a Proof-of-Work consensus algorithm to Proof-of-Stake, its DeFi ecosystem could lose this property. Thus, some applications could become less interoperable with each other or stop working altogether.

The Bearish Case For Solana, What Could Prevent More Gains

As NewsBTC reported, the Solana Foundation launched stake pools with the purpose of increasing the security of its network, make it more censorship-resistant, and provide SOL holders with more incentives to participate in the ecosystem.

The latter has been one of the heaviest criticisms made by the project’s detractors in addition to the network’s level of centralization. Cheung believes this is part of the bearish thesis for Solana claiming the network “may never decentralize enough in the future”.

The second part that could prevent this ecosystem to gain further traction is Ethereum itself. This competitor still supports the majority of DeFi projects, has a high number of developers working on dApps and the development of the ecosystem, second layer solutions, and more.

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Source: Daniel Cheung via Twitter

Cheung claimed Solana “faces a steep uphill battle vs Ethereum”. However, DeFi is one of the sectors where it’s more visible than the crypto industry is still in its early phase and could inevitably be heading towards a “multichain world”, as Cheung called it while he added the following:

It is still unclear whether smart contracts will be a winner-take-all market. While Ethereum is currently in the lead, data points increasingly point towards a multi-chain future, at the very least for the foreseeable future as this market plays out.

Moreover, on the centralization issue, the investor said that there is a lot of debate around when a blockchain has the right balance of decentralization. Cheung estimates that 1,000 or 10,000 nodes could be sufficient, this would make the criticism towards this network “invalid”.

Data presented by the investor claim that development activity in the SOL ecosystem are “trending very well” and has accompanied its price appreciation. The trend seems poised to continue in the coming months, as relevant figures in the crypto space, such as FTX CEO Sam Bankman Fried, are “heavily involved” with Solana.

Cheung claims that Bankman Fried has been making serious investments into this ecosystem. The exchange and its CEO have been making external investments in traditional finances, sports, and consolidating partnerships with other investors, politicians, celebrities, and others.

Thus, institutions from Wall Street are keener to jump into Solana and its ecosystem. Cheung concluded:

So with the bear arguments nullified, you are left with an asset that offers one of the best R/R in crypto right now, and one that offers practically unlimited upside in a bubble given its comped to $ETH which trades like its running to become the internet’s reserve currency.

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