Despite falling recently, Shiba Inu (SHIB -10.24%) has still skyrocketed over 77,000,000% in the last year, a figure that would be inconceivable in virtually every other asset class. At that pace, $1,500 invested in Shiba Inu last November would be worth over $1 billion today. And that jaw-dropping fact may have some investors ready to throw money at this Dogecoin-inspired token.
However, Shiba Inu offers very little utility, and hype alone has been the primary driver behind its soaring price. More to the point, the chances of Shiba Inu delivering a repeat performance are virtually nonexistent. So if you want to invest in cryptocurrency, it's best to look for opportunity elsewhere.
Several blockchain projects feature cryptocurrencies with far greater promise, and those assets are more likely to appreciate in value over time. For instance, Ethereum (ETH -5.87%) and Solana (SOL -9.56%) have tailwinds working in their favor. Here's why.
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1. Ethereum
Ethereum is a programmable blockchain. That means, in addition to storing transaction data, the network can execute smart contracts, computer programs that run automatically when predefined conditions are met. That technology forms the basis of decentralized finance (DeFi) applications, products that make it possible to borrow, save, and lend cryptocurrency.
More importantly, because blockchain technology eliminates the need for intermediaries like banks, DeFi services form the foundation for a cheaper and more inclusive financial system. To that end, $170 billion is currently locked in Ethereum DeFi products, up over 1,000% from November 2020. That makes the Ethereum blockchain the most popular DeFi ecosystem by a wide margin.
So what's the investment thesis? DeFi applications require computing power, and computing power costs money. That means users must pay transaction fees using the network's native cryptocurrency. In other words, as demand for DeFi services continues to rise, the price of the cryptocurrency should continue to rise as well.
2. Solana
Similar to Ethereum, Solana is a programmable blockchain, meaning its supports smart contracts, DeFi products, and other decentralized applications (dApps). However, Solana was designed to be faster and more scalable than other platforms, and that feature could supercharge its popularity in the coming years.
To understand exactly why that matters, context is necessary. Ethereum is currently undergoing an upgrade, the next phase of which will take place in 2022, whereby 64 shard chains will be connected to the core blockchain. That will increase throughput by spreading the compute load across more infrastructure. And once that initial phase is complete, the Ethereum network will handle 3,000 transactions per second (TPS), far more than its current 30 TPS.
However, that figure still falls short of the 50,000 TPS that Solana can handle. In fact, Solana is currently the world's most performant blockchain, offering tremendous throughput and near instant finalization times. That makes the platform more scalable, because the network can support more traffic than alternative options.
So what's the investment thesis? Approximately $14.1 billion is currently locked in Solana DeFi products, making it the third-largest DeFi ecosystem behind Ethereum and Binance. However, if demand for DeFi services continues to rise, and Ethereum's network fails to meet that demand, funds could pour into Solana, driving its price higher.
