Solana: The New Ethereum
While bitcoin is breaking out to all-time highs, there is a quiet mover quickly running up the crypto ranks.
Solana.
This cryptocurrency is so strong that it is poised to eventually overtake Ethereum as the number two cryptocurrency on the landscape. Some have even put $10k targets on SOL. I’m not sure about $10k, but certainly $1k is attainable which is what I tell my son. While ETH still struggles well below their all-time highs, SOL is already poised to break out from the last bull run highs right along with Bitcoin. That’s how strong SOL is… its leading the market right along with BTC.
Why is SOL so strong? Why do many believe SOL is on a path to overtake ETH?
- Low Transaction Fees – the system is designed for transaction costs which makes it popular with developers and users including microtransactions buying $5 worth of a meme coin.
- Speed of the system – The Solana is capable of processing up to 65,000 transactions per second with its unique architecture and consensus mechanisms.
- Proof of History PoH – Is an innovation of the Solana system which is a timekeeping technique helping nodes agree on the order of events without constant communication when combined with PoS gives Solana an undeniable technical edge to Ethereum
- Proof of Stake PoS – Helps secure the network and validate transactions in an energy efficient manner as well as provide validators rewards through staking.
- Friendly Ecosystem – Solana offers developers a suite of tools and resources to build of its platform.
- Smart Contracts – Self executing contracts that can be used in a wide range of applications from DEFI to NFTs.
The number one reason is transactions costs and speed of the system. That is what is driving SOLANA. Efficiency of the system. It is just superior technology to ETH which was developed soon after Bitcoin while SOL was developed in 2020. Bitcoin is digital gold, so they don’t need to change. But there is only 1 digital gold.
BTC.
So where does that leave the #2 crypto ETH? Kind of in dinosaur territory on the verge of being extinct as irrelevant. The SOL network is extremely fast, and its fees are some of the lowest in the industry which makes this an ideal coin to both transact with, trade with, and whose blockchain have meme coins that consumers will want to transact with. Irrelevant may be overexaggerating the #2 cryptocurrency. But it is not an exaggeration to how much better SOL is than ETH.
They don’t have to build a second layer like ETH 2.0 and PEPU just for transactions. ETH’s network is so plugged up due to it being just too busy with, staking and NFT’s and everything else built off that network. It doesn’t help that SOL’s blockchain is superior to ETH’s as well. You can buy SOL and then exchange it for pretty much anything at a fraction of the cost of ETH. You want to buy say PEPE, the largest MEME coin in the ETH network, its going to cost you $20 in gas fees for $20 worth of coins. A similar transaction in the SOL ecosystem, say buying the largest MEME coin on that network, BONK, will cost you less than a dollar for the same transaction.
I did an experiment between ETH and SOL. I put $100 into SOL in a SOL wallet (Phantom) and the $100 into an ETH wallet (MetaMask). Just getting the money into the wallet cost me 3% in fees on ETH. It was FREE on SOL. Then I went to buy the most popular MEME coin on ETH, PEPE. For $20 in coins it literally cost me $20 in gas fees. I was literally choking… how can anyone trade coins like this?
You can’t. Literally MEME coins on ETH are a joke because you need massive moves to make money or have to buy a large amount of coins at a time.
So, let’s go to the SOL network. I bought $20 worth of SOL’s most popular MEME coin, BONK. I think on a Friday night the fees were super low, but it cost me 50 cents for the an identical transaction.
It’s not even a contest. $20 bucks or 50 cents? This is supposed to be DEFI…do I have to go to Robinhood to trade PEPE with no fees? Then there are Robinhood’s routing issues that I would never trust. Getting the best price? Yeah right.
Fortunately, its not all doom and gloom for ETH, they are trying to evolve.
PEPU is a layer 2 blockchain of the meme coin PEPE that is supposed to bridge that gap with low fees and higher speeds. But we are talking about BLURAY VS. DVD. This is basically a situation where one technology is overtaking another. Even with the development of PEPU and layer 2 at ETH, at present, ETH is losing this battle as SOL is becoming the go to place for meme coins and if that is the case, most likely the birthplace of many coins destined for a payments system.
If you are going to trade coins, especially up and coming MEME coins, its not even a contest, SOL wins every time because the fees to trade in and out of coins is minimal compared to other coins. The Solana blockchain is superior technology and as altcoins and meme coins takes hold this crypto bull market, SOL is the clear winner. They even have several DEFI exchanges launched off their technology including Jupiter and Raydium. These exchanges are making it simple for crypto investors to trade their coins within the Solana ecosystem, without having to rely on Binance or Coinbase or for the average investor, wait for an uplisting to Robinhood or Wealthsimple.
So why are meme coins rising in popularity these days?
- They make ideal payment alternatives to fiat. If done right, they are true public assets like DOGE. They are not owned by anyone, the government, private individuals, or corporations.
- They have a high public confidence because they are community driven.
- Most are end layer blockchain technology meaning the coins are not bogged down by other technology on the blockchain which ultimately slow down transaction speeds and increase costs.
- They are fun.
I am going to hazard a guess that its those low fees and speeds which translate into a coins ability to become payment alternative. This is the end goal of a good portion of cryptocurrency, to compliment and support a fiat system, and put checks and balances on public debt tied to fiat.
What are the cheapest coins to transact with?
From the table below its easy to see that both SOL, XRP and TRON stand out as large cryptocurrencies with both low transaction fees and near instant speeds.
| Crypto | Transaction Fee | Transaction Speed | Market Cap |
| PEPU | Extremely Low | Instant | TBC |
| Nano | $0 | Instant | $170M |
| IOTA | $0 | Instant | $744M |
| TRON | 1 free transaction per day | 3 seconds | $10.6B |
| Solana | $0.00025 | 2.5 seconds | $81B |
| Dogecoin | $0.04 | 1 minute | $24B |
| XRP | $0.0002 | 4 seconds | $30B |
| Litecoin | $0.0025 | 2.5 minutes | $6B |
| Monero | $ 0.0010 | 2 minutes | $2.5B |
| Bitcoin Cash | $0.01 | 10 minutes | $10B |
If you are a cryptocurrency destined for the payments system has anything over 5 seconds time, it would be ridiculously slow and not worth the blockchain it is built on. Certainly, taking minutes to confirm a transaction wouldn’t be worth using at any retail chain. Nano and IOTA are also potential candidates for a payments system although at such smaller market caps they could only supplement a system as opposed to become a driving force behind one.
A payment system or systems evolving out of crypto will be a major driving theme behind this bull run. If you want crypto to survive a BTC winter better, we need people transacting everyday in crypto, not just trading it. Is this the cycle where people adopt crypto to spend? That really is anyone’s guess, but it is easy to see that many crypto this run is already being positioned to be a payment coin.
What are the companies investing into Solana?
Sol Strategies HODL.CA $1.35/$197M is undeniably developing into the market leader. They are the first mover in the space whose SP has gone from $0.10 to $2. The share price has settled down a bit trading between $1.20 and $1.50 after the company announced a deal to acquire 4 network validators tripling the company’s capacity to validate the Solana network which increases the company’s validating commission. They are validating a total of $285M CAD SOL in the network.
The company also owns and stakes 105,249.82 SOL ($25M) for which they earn a minimum 7% staking rewards. Considering that Solana is projected to exceed Ethereum this cycle $1000 SOL would be mean the company owns $105M worth of SOL. Considering the income the company is making in the Solana network and their asset book. I would expect HODL to keep on its meteoric rise. In addition to the SOL network validators the company also purchased validators for the SUI, MONAD, and ARCH networks validating a total of $181M CAD in assets. As Solana puts its footprints all over this bull run, HODL will be the go-to company as a proxy for SOL. This company is quickly becoming a market darling in this emerging subsector. The last time they bought SOL it was $191 so their cost base for their SOL is low. They are the market leader.
SOL Global Investments SOL.CA $0.19/$10M and Neptune Digital Assets NDA.V $0.85/$104M are two companies that have invested into the SOL network by owning and staking Solana. Neptune is a diversified crypto investment company who announced they purchased and staked 31,715 SOL at 7%. SOL Global Investments is taking a strategic approach and deploying all their working capital into Solana through purchase and staking coins. SOL recently deployed $2M into the network at $245 high. Of all the companies this is the highest risk with the highest cost base, but still, if SOL goes to $1000 this cycle the purchase will seem cheaper in retrospect. SOL.CA recently announced a $3.6M PP at $0.20 to put towards investing in the Solana ecosystem.
It certainly speaks to the potential of SOL when we have a company buying $2M SOL at the 52 week high.
Prophecy DEFI $0.04/$4.65M is a company taking a different approach in the Solana ecosystem. Prophecy DEFI are supporting DEFI exchange Jupiter owning JUP tokens. Jupiter is the top DEX in the Solana ecosystem. The upside to owning the tokens of the top DEFI exchange in the Solana ecosystem has a big upside. Jupiter provides liquidity to the Solana system similar to what Uniswap did for the Ethereum network. PDFI owns 427,363 JUP and 422,913 PYTH which provides critical on-chain data within Solana and interoperable networks.
With the token trading at $1.20, this exchange could easily grow to 5 to 10x or more. Uniswap went from a low of $1.76 in 2021 to a high of $44.97 and currently trades at $9.64. If JUP takes on a similar trajectory, $20 could be in the cards for this token and its long term price projection could be $5. This exchange was just launched in February and is seeing a consistent surge in trading volumes growing to the top exchange in the ecosystem. What is clear is that PDFI has positioned itself within the crypto industry to have a balance sheet and book value that is well above the current market cap as early as next year. A $20 JUP token would imply a $10M BV on just that investment alone, let alone any staking rewards that the token provides.
These companies HODL, NDA, SOL, PDFI are the first movers into the Solana ecosystem. This makes these companies even more exciting than your typical BTC miners because Solana is on a trajectory unlike any other top crypto. It certainly makes Solana an exciting and up and coming subsector in the crypto industry.
Christopher Skidmore
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