Key Points:
- Solana’s 2023 Achievements: Strengthening technology and forging key partnerships.
- Network Stability: Solana’s 100% uptime and growing Total Value Locked (TVL).
- Challenges Ahead: FTX’s liquidation plan and maintaining credibility.
During the bear market, the Solana network utilized the opportunity to enhance its core technology and establish crucial partnerships, making it a standout player in the blockchain world.
While the native token’s price performance may not have been remarkable, the proof-of-stake (PoS) network seized the bear market as an opportunity to enhance its foundational technology and form essential partnerships with prominent players in the traditional finance sector.
Solana Overcomes Network Outages
Nansen, an on-chain analytics firm, has released a report that highlights notable achievements, risks, and growth prospects within the Solana ecosystem.
Foremost among Solana’s strengths are its cost-effectiveness and rapid transaction speeds, earning it the nickname “The Ethereum Killer.” The network boasts over 3,000 transactions processed per second (TPS), nearly 30 times that of Ethereum (ETH).
These network advantages make Solana an attractive choice for decentralized applications (dApps) in various domains, including finance, gaming, and non-fungible tokens (NFTs). However, these strengths were marred by a history of network downtime and halts.
Nonetheless, Solana made significant strides in this area in 2023, maintaining a flawless 100% uptime according to the report.
Impressive On-Chain Metrics
The marked improvement in network stability has had a positive impact on the chain’s liquidity. The total value locked (TVL) in SOL now stands at 27.12 million, more than double its value at the beginning of the year.
While TVL remains a critical indicator of blockchain adoption, it’s essential to consider user activity as well. DeFi velocity, a metric measuring the volume per dollar of TVL, indicates how much transaction activity occurs relative to liquidity. Solana emerged as the most actively used network in the past week, boasting a DeFi velocity of 0.71. Notably, some chains with higher TVL than Solana recorded lower DeFi velocity.
Moreover, monthly transactions on the network remained stable, with a significant portion being vote transactions. Vote transactions are associated with voting accounts owned by validators, while non-vote transactions involve Solana transfers broadcasted to the network and collected into blocks.
Nansen pointed out that the growing TVL and on-chain activity bode well for Solana’s future growth.
Notable Recent Achievements
Solana’s robust on-chain fundamentals have played a pivotal role in securing high-profile partnerships recently.
One of the most significant partnerships is with the payment giant Visa, which extended its stablecoin settlement capabilities to the Solana chain. Visa acknowledged Solana’s advantages when announcing this partnership.
Additionally, Solana Pay’s introduction as a new payment system on the popular e-commerce platform Shopify further showcases the network’s penetration into the Web2 world.
Solana’s technical prowess also garnered recognition from the Web3 community, with MakerDAO, a leading stablecoin issuing protocol, considering Solana as an alternative to Ethereum for its upcoming standalone blockchain.
Challenges Ahead for Solana
Despite the positive developments, Solana faces certain challenges that could potentially impact its ecosystem negatively.
Nansen has identified FTX’s forthcoming liquidation plan as one of the most significant tests for Solana in the coming days. FTX holds a substantial amount of SOL tokens, representing nearly 17% of SOL’s circulating supply. The potential market flooding resulting from this liquidation plan could lead to a significant drop in SOL’s price, reminiscent of the collapse of the exchange last year.
Additionally, while Solana maintained 100% uptime in 2023, any future network outages could severely damage Solana’s credibility in the market.
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