As of Tuesday afternoon, Solana (SOL +1.93%) was trading in the neighborhood of $43 per token, giving it a market cap of almost $15 billion, according to Coinbase. If its token price increased to $1,000, it would have a market cap of $346 billion. That would be shy of Bitcoin's market cap of $462 billion but more than Ethereum's market cap of $208 billion. So, is such a gain inconceivable? No -- but it would be a long shot.
That said, the market may already be seeing the groundwork for Solana to experience a meteoric rise over the next few years, and it's all about users and developers building for the blockchain.
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Usage would have to increase in a major way
According to the State of Crypto Report published by venture capital firm A16Z in May, there are about 1,000 developers working on the Solana blockchain. That puts it behind only Ethereum, which has attracted 4,000 developers. But the pace of growth on Solana is fast. The blockchain didn't even have one major NFT (non-fungible token) project a year ago -- that's how new it is.
Since the start of 2022, the number of daily active programs running on the Solana blockchain has increased from 424 to more than 1,100. This is a gauge of developer activity and users' interactions with blockchain programs.
As impressive as this growth is, Solana's development pipeline and usage would need to increase dramatically to drive the token price upward to $1,000. Daily active wallets would need to increase 100-fold from their recent level in the range of 800,000 to more like 80 million. The number of developers on the blockchain would likewise need to grow from the current 1,000 or so to more like 100,000. Those things are possible, but attracting that many users and developers will be an uphill battle.
CRYPTO: SOL
Key Data Points
Breaking down barriers
One reason I think Solana has a big advantage over other cryptocurrencies and blockchains is Solana Labs' ability to innovate. It introduced the Solana Saga smartphone earlier this summer in an effort to make interacting with the blockchain easier and increase security. The security features live on a secure element on Saga and users automatically sign into their wallet when using the phone.
Developers have also built executable NFTs on the Solana blockchain. These essentially make NFTs into an app that would automatically access a users' information on the blockchain, unlocking decentralized apps. For example, an NFT project building a metaverse could have an executable NFT that automatically logs a user in using their wallet and unlocks the digital assets the user owns. No need to sign into a centralized server or with a new username and password. Imagine executable NFTs on the Saga phone as the future of a more usable blockchain.
This could allow us to sign in to website subscriptions, show concert tickets, or even do stock or crypto trades with the tap of a button.
I don't see any other cryptocurrency or blockchain innovating as quickly as Solana, and the guiding star for the entire project seems to be ease of use for the average user. That can't be said for either Bitcoin or Ethereum.
Real use cases
For Solana's price to really take off, it will need to provide real utility to users. But projects that provide that are exactly what developers on the blockchain are building with projects like Solana Saga and executable NFTs -- and I haven't even mentioned Solana Pay, which could lower the cost of transactions around the world.
I think Solana is one of the top cryptocurrencies today, and investors who can see disruption coming from the blockchain should be very bullish on it. I even think it could reach $1,000, though that would be a big leap in value. We've seen cryptocurrencies make moves like that before.
