Crypto's unexpected market recovery this year has led to some formerly underperforming cryptos suddenly propelling the market forward. Solana (SOL +5.20%), for example, is up a head-spinning 125% this year. But that's nothing compared to what rival Aptos (APT +8.35%) is doing: It's up 250% for the year, and was up an extraordinary 387% in January.
Aptos might have short-term market momentum behind it, but I still think Solana is a better long-term buy. Here's why.
Solana's ecosystem
While the market meltdown last year may have considerably leveled the playing field for up-and-coming Aptos, it's clear that Solana has a huge first-mover advantage. Aptos, which only launched in October 2022, is still looking for users, developers, and a "killer app" that will help it establish some sort of competitive advantage in the Layer 1 blockchain space.
Solana, in comparison, launched in March 2020 and has a vibrant crypto ecosystem already in place. Over the past three years, Solana has become a leading blockchain network for non-fungible tokens (NFTs), decentralized apps, and blockchain gaming. Moreover, it is now making a push into areas such as decentralized finance (DeFi). These are all areas where Aptos will have a very difficult time ever catching up.
Image source: Getty Images.
Solana's roadmap
As a long-term investor, I'm also much more comfortable with Solana's roadmap for future development. In January, Solana's co-founders outlined all of the ways the blockchain network is using the decentralized web to build value across a wide variety of industries and sectors. All of the various strategic initiatives of the past 12 months -- including the launch of Solana Pay and Solana Mobile -- are part of a broader, more comprehensive strategy based around Web3 and decentralization.
CRYPTO: APT
Key Data Points
In comparison, I'm not sure what to make of Aptos, and even the founders of Aptos have said that 2023 will be pivotal in figuring out what the blockchain will eventually become. The blockchain seems to be making a play for corporate users who need access to a high-throughput, high-speed blockchain. This makes sense on a certain level, because the elite developer team behind Aptos helped create a state-of-the-art blockchain for Meta Platforms.
However, I'm not so sure this is the right strategy for Aptos, especially in light of the recent blockchain partnership between Amazon and Layer 1 blockchain Avalanche. Via its Amazon Web Services unit, Amazon will now be able to offer blockchain solutions to large enterprise and government clients. These are exactly the types of clients that might have considered building on top of the Aptos blockchain.
Network performance
If there is any one category where Solana might be lagging behind Aptos, it's network performance. In 2022, one of the big issues facing the Solana blockchain was network instability. There were a number of high-profile outages throughout the year, and that caused a lot of investor concern that perhaps the Solana blockchain was growing too fast, spurred on by aggressive VC investors who needed to see a quick return on their investment.
At the end of 2022, Solana made a number of moves to shore up any holes in network performance, and things looked good. But then another network outage hit at the end of February, and suddenly network instability is once again an issue with Solana. That's not to say that Aptos hasn't had its share of falls and stumbles -- ever since it launched, there have been questions about its transaction processing speeds.
The FTX contagion factor
It's impossible to talk about Solana and Aptos without also mentioning FTX. Both blockchain networks burst onto the scene with extensive venture capital financing led by former FTX CEO Sam Bankman-Fried and FTX Ventures. And entities affiliated with FTX -- such as hedge fund Alameda Research -- are known to hold extensive amounts of both Solana and Aptos tokens.
As a result, both tokens were dragged down considerably by the collapse of FTX in November. There were serious concerns that FTX (or its affiliates) might liquidate their holdings of Solana and Aptos entirely. The huge rally in both Aptos and Solana this year is a "relief rally" as much as it is a show of confidence in the long-term prospects of either.
Should you buy Solana or Aptos?
At the end of the day, I'm much more comfortable with Solana than Aptos as a long-term investment. Arguably, Aptos may have superior technology, but Solana has a clear first-mover advantage. It has built up a dynamic ecosystem over the past three years, has a number of strategic initiatives in place to build long-term value, and has emerged as a viable competitor in areas such as NFTs and blockchain gaming.
Aptos, in comparison, is really too new to assess. Unfortunately, Aptos launched at almost the exact moment when FTX was imploding, so we may never know the blockchain network's full potential. When choosing between Solana and Aptos, I'm choosing Solana.
