The uncertain macroeconomic environment has investors moving away from assets perceived as risky. As a result, the crypto market has plunged 57% from its all-time high, and many individual crypto assets have fallen even further. For instance, Solana (SOL -4.28%) and Chainlink (LINK -3.80%) are down 80% and 86%, respectively.
Of course, those losses hurt in the short term, but the current market crash creates an opportunity for long-term investors. Crypto prices have always bounced back in the past, and Solana and Chainlink are backed by a compelling investment thesis.
Here's what you should know.
Solana is a smart-contracts platform powered by the SOL coin. The project was started by former Qualcomm software engineer Anatoly Yakovenko, and his expertise shines through in the blockchain architecture. Thanks to a unique proof-of-stake consensus mechanism, Solana can theoretically handle 50,000 transactions per second. Better yet, those transactions can be finalized in just 13 seconds, and users pay a fraction of a cent in transaction fees. That makes Solana far faster and cheaper than Ethereum.
More importantly, the platform has captured the interests of developers and investors. There are over 1,500 blockchain projects in the works on Solana, including NFT marketplaces, Web3 applications, and a wide variety of decentralized finance (DeFi) services. In fact, Solana is the fifth-most-popular DeFi ecosystem in the crypto industry, with over $4 billion invested on the blockchain.
Looking ahead, several recent catalysts could drive price appreciation, but the recently launched Solana Pay is one of the most noteworthy. The platform allows consumers to transact directly with merchants, eliminating third parties like banks, payment processors, and card networks. And by removing those intermediaries, Solana Pay makes digital payments far more efficient. For context, PayPal typically charges 2.99% plus a fixed fee for credit card transactions, but you would pay a fraction of a penny with Solana Pay.
Additionally, Coinbase Global recently added support for Solana to its self-custody wallet. That means Coinbase Wallet users can now hold coins from the Solana ecosystem and engage with software and services on the blockchain. That could move the needle for Solana, as Coinbase is the largest cryptocurrency exchange in the U.S. by trading volume.
In closing, the bull case for Solana is straightforward: As more users adopt software and services on the blockchain, demand for the underlying SOL coin will rise, pushing its price higher. That's why this beaten-down cryptocurrency is a smart buy right now.
Smart contracts are computer programs that run automatically under certain conditions. In other words, they are the instruction sets that power DeFi applications and are a more efficient method of forming agreements. Smart contracts allow anonymous parties to engage in deals and transactions without an intermediary. And once deployed, they cannot be altered or deleted, which means they are essentially tamper-proof.
Unfortunately, the utility of smart contracts is limited because blockchains are, by design, incapable of interacting with external systems. In other words, blockchains cannot access real-world data. Chainlink solves that problem.
Chainlink is a network of decentralized oracles -- entities capable of bringing real-world data onto any blockchain. The Chainlink protocol is powered by the LINK coin. Specifically, oracle node operators -- the people who run the network's hardware and software -- must stake LINK in order to participate, and they are paid in LINK for completing jobs.
Here's an example: Let's say you want to book a rental property that happens to be supported by a smart contract. When you enter a specific date, the smart contract would request pricing data from Chainlink. Node operators would bid on the task, and the protocol would select several oracles to complete the job.
That's particularly important: Choosing just one oracle would introduce a single point of failure, but by selecting several oracles, the protocol ensures the decentralized nature of the blockchain remains uncompromised. All the data from the different oracles is aggregated and reconciled to ensure an accurate result.
Chainlink is not the only decentralized oracle network, but it is the most popular by a long shot. It has more integrations -- data providers and blockchains -- than any rival, and it supports nearly $25 billion in DeFi investments, more than the next 10 oracle networks combined. In fact, Bank of America analyst Alkesh Shah recently said Chainlink is one of the reasons that the DeFi industry itself is growing so rapidly.
That makes the investment thesis crystal clear: As smart contracts become more mainstream, demand for Chainlink oracles should rise. And because those oracles are paid in LINK coins, demand for the underlying cryptocurrency will rise as well, driving its price higher. That's why this cryptocurrency is worth buying.