What happened

Like other top cryptocurrenciesSolana (SOL -2.44%) has seen some significant selling pressure Tuesday. As of 12:50 p.m. ET, the proof-of-stake project's tokens had sunk by 8.4% over the previous 24 hours. That positioned Solana as the second-worst performer among the top 10 tokens by market cap, just behind Ethereum (ETH 2.05%), which had declined by 9.5%.

Macro factors are certainly among the drivers of Solana's decline. Most major tokens are down substantially Tuesday as investors consider the risks associated with this week's Fed rate hike decision, among other factors.

However, Solana has been grabbing the attention of prominent crypto proponents, who have cited a rather compelling bear case for it. Among the most ardently bearish individuals on Solana of late is Justin Bons, founder and chief investment officer of the crypto venture capital fund Cyber Capital. Bons is well-respected in this space, and his opinion carries weight with many who follow him on social media.

The bear thesis Bons has outlined is multifaceted.

First, in recent months, Solana's blockchain has seen significant downtime relative to other top projects in this space. In fact, Bons highlights the fact that Solana is the only blockchain to have undergone seven outages in recent months, making it a worrisome outlier.

Second, Bons has called into question Solana's peak throughput metrics. Solana Labs claims its blockchain maxes out around 400,000 transactions per second. In reality, it typically operates at a much slower throughput level, even at peak times.

Additionally, Bons and others believe that Solana's recent launch of an Android smartphone could be a decoy the Solana Labs team will use as a way to "cash in" before the selling pressure really beings.

Finally, overarching issues of the blockchain's security have Bons concerned. He suggests that relative to other blockchains, a 51% attack may be more likely with Solana, given centralization issues with how the network's validators operate. Among the reported issues causing validator centralization are higher comparative equipment costs.

So what

There's a lot to digest when it comes to Bons' bear thesis on Solana. Many may be aware of the various outages the blockchain has experienced. This isn't a new issue, and we've been covering it for months. 

However, these concerns are certainly worrisome for investors. When well-known individuals in this space such as Bons highlight why these concerns should be taken seriously, many ears in the crypto community perk up. Mine certainly did as I read through his previous threads on Solana.

Now, the Solana Labs team has responded to many of these concerns, suggesting that Bons' theses have largely been debunked. Many networks experience outages or downtime. Accordingly, the recent attention Solana has received from distributed denial-of-service (DDoS) attackers isn't out of the ordinary.

Additionally, developers behind the Solana blockchain have come up with some detailed fixes they hope will provide long-term solutions for many of these issues. While these fixes may take time to implement, the suggestion is that investors need to be patient through these growing pains.

Now what

Solana's speed and cost advantages, relative to behemoth Ethereum and other competitors, are what make this project enticing for long-term investors thinking about the high-level problems crypto could eventually help solve. Many have touted Solana as a potential "next-generation" or "improved" version of Ethereum, and one that could see similar price appreciation over time, assuming its ecosystem growth follows a similar trajectory.

However, the question is whether Solana's blockchain gives up too much in the way of security and stability in the pursuit of these advantages. Ethereum's blockchain has been remarkably stable, and that's one of the reasons why it's the top dog. It's hard to make the argument that Solana could surpass Ethereum given its stability concerns.

Thus, Bons appears to highlight some pertinent issues which could provide near-term headwinds for this project. While I'm bullish on Solana in the long term, in the medium term, it's clear there's plenty of work to be done. Accordingly, as always, when considering this token as a potential investment, investors ought to consider the risks as well as the catalysts.