In an announcement on Sept. 22, the decentralized internet provider Helium (HNT -5.57%) stated that it would be transitioning its blockchain to Solana (SOL 10.44%). Following a community poll, more than 81% of the nearly 7,500 votes were in favor of ditching Helium's current blockchain and moving over to the lightning-fast, smart-contract-compatible Solana.
The target for this transition is set to happen quickly. Helium co-founder Amir Haleem is optimistic that the fourth-quarter deadline will be met.
Abandoning its blockchain and moving to Solana is another major and necessary move for Helium as it plans to enter a new area of service. On Sept. 20, it was announced that Helium will partner with wireless network provider T-Mobile (TMUS 0.55%) to provide a decentralized, blockchain-based 5G network.
A new partnership needs a new blockchain
Helium started out as a decentralized wireless network for Internet of Things (IoT) devices like sensors and trackers, and rewarded users with tokens for running hotspots. Now, Helium aims to do the same, but with a 5G network so that smartphones can take advantage of expanded coverage. Hot spot operators and users of the 5G network will have the opportunity to receive a new token called MOBILE as a reward for sharing data and maintaining the network.
When considering that the number of IoT hotspots is closing in on 1 million active nodes and Helium is now adding 5G coverage, there is a substantial need to move to a blockchain that could support this vast network -- something Solana should be able to do easily.
By switching to Solana, Helium will be able to take advantage of a few perks that the blockchain offers. First is speed. Solana is one of the fastest blockchains and can handle thousands of transactions per second. This is a highly sought-after feature for an expansive and intricate network like Helium.
At one point, the Ethereum (ETH 4.68%) blockchain was considered to be the home of Helium due to its diverse ecosystem of decentralized applications (dApps) and smart contract functionality. But because of its limited transaction throughput and surging fees during peak times, Ethereum was put on the short list and Helium developers decided to build their own blockchain.
But now that Helium is growing, it needs a blockchain that can support its expansion. And since Solana's ecosystem has matured in recent years, the transition will allow Helium users to interact seamlessly with wallets, DeFi protocols, and dApps built on Solana -- another added perk.
Arguably the most important benefit of this move will be that Helium now has to focus on just one thing -- expanding and supporting its network. Before the transition, Helium developers had to ensure that its blockchain was running properly and efficiently in addition to maintaining the network, but now they can leave that extra work to Solana.
The case for Helium
Since 2019, Helium's goal of creating a decentralized, blockchain approach to providing internet has evolved at a rapid pace. However, as innovative as it is, Helium has had its own fair share of bad press. An article by Forbes reported that around half of all the HNT was mined and sent to just 30 wallets within the first three months of the network's launch. Those wallets were owned by friends and family of Helium's creators and were worth as much as $250 million when Helium peaked last year.
While the news surely is reason for concern, it's becoming clear that Helium's decentralized internet model is in increasing demand, and investors could benefit from that. For Helium to provide adequate support for T-Mobile's 5G users, it will need to build its current inventory of 5,000 5G hotspots to somewhere around 50,000. Given its past history and long road ahead, investors should check back on Helium in a couple of months to make sure its infrastructure is growing.
The case for Solana
As for Solana, this migration of Helium will put the lightning-fast blockchain to the test on a scale not seen before. Yet this is exactly what Solana is built to do -- provide projects with a fast and cost-effective blockchain solution to support their development.
If Solana can prove that it's capable of handling such a task, it could be the beginning of a growing influx of more projects making the transition. And like Helium, Solana's price has been decimated this year. After hitting an all-time high of nearly $260 last November, its price is now only trading around $30 or so. Due to Solana's more favorable public relations history and its potential to become the future home of other projects, investors should see this as an opportunity to take advantage of some discounted prices.