You might have noticed that prices for SOL — the cryptocurrency that powers the smart-contract-compatible Ethereum competitor Solana — have climbed from around $30 at the beginning of the month to around $75 on Monday. What’s behind the spike? Let’s take a look.
- Solana was boosted by the very on-trend release of a primate-themed NFT series. When Degenerate Ape Academy (the first major NFT project to launch on the blockchain) came out on August 16, SOL prices climbed more than 30%.
- Solana is generally seen as a competitor to Ethereum, in that it’s designed to be a flexible platform for running crypto apps: everything from Degenerate Apes to the Serum decentralized exchange.
- Its major innovation is speed. Solana can process around 50,000 transactions per second via a bundle of new technologies including a consensus mechanism called proof of history. To compare, Ethereum can handle 20 or less per second. (The ETH2 upgrade, which is currently underway, is designed to make Ethereum much faster than it is now.)
- Remember there can be extra risks that come with emerging crypto applications and technologies, from significant volatility to the potential for undiscovered smart-contract bugs to be exploited.
Why it matters… Because Solana is so fast, congestion and fees are extremely low. Developers hope high speeds and low fees will eventually enable Solana to scale to compete with centralized payment processors like Visa. Recent buzz has driven SOL’s market cap above $20 billion — making it bigger (for the moment, at least!) than all but ten or so cryptocurrencies.