Solana (SOL +0.01%) is a far cry from where it was in late 2021, when its value peaked at over $250 per token. But the blockchain itself is stronger than ever.
Transactions are fast on Solana, frequent users stayed during the market downturn, and corporations are now starting to take developing on Solana seriously. After a run-up over the last few months, where the price per token nearly tripled in two short months, is Solana worth buying as long as it's under $60?
Let's find out.
CRYPTO: SOL
Key Data Points
Solana's technical advantages over other blockchains
Solana has always been one of the fastest blockchains. It was built with speed and low cost in mind, and we are seeing that in reality. On-chain data shows that transactions per second (including voting transactions) hover between 4,000 and 5,000 per second. Excluding nonvoting transactions, there are as many as 600 transactions per second, and that's not the limit of the blockchain's capability.
Cost per transaction is so close to zero that it almost doesn't make sense to talk about. According to Solana Compass, in the past 24 hours, the average fee for a transaction was about $0.003. That's a fraction of what a higher-priced blockchain like Ethereum (ETH +0.72%) or even Ethereum's Layer 2 blockchains, or scaling blockchains built on top of Ethereum, cost. Those pennies per transaction can add up in a hurry if you execute a lot of transactions.
According to The Block, there are about 350,000 active wallets on the Solana network, similar to Ethereum's 365,000 addresses. So this is one of the most active blockchains in the world.
Big companies are paying attention to Solana
One of the more prominent signs of adoption that investors and traders should be looking for is companies starting to use the blockchain as parts of their business. In the case of Solana, the blockchain is getting a lot of attention from big companies.
Visa is beginning to use Solana as part of its settlement layer for transactions, while Shopify and MercadoLibre are using it as a way to pay for transactions in their retail systems. These are all payment services, and the speed and low cost of Solana is an attractive use case for them. Low transaction fees and fast settlement of payments -- that's just what the doctor ordered for an efficient payment option on a high-volume shopping platform.
This is just an example of companies using Solana for some kind of technical use, and as the blockchain matures and becomes more reliable, I think we will see even more companies use it.
So, is Solana a buy now?
Widespread adoption of the Solana blockchain is great, but does that mean the token will go up in value?
For now, the answer appears to be yes, but I'm not sure whether or not that will be the case long term. The corporate money transfer use cases I highlighted are primarily using USDC tokens, a U.S. dollar stablecoin that operates on Solana and other blockchains. The coin started out on the Ethereum chain but now maintains addresses in dozens of different blockchain networks. So, fees need to be paid for using Solana tokens, but that doesn't mean the Solana token will be used to buy items in the future.
I think it's more likely that tokens like stablecoins become the most common token used on Solana, rather than the Solana token itself.
That's why I'm holding, but not buying, more Solana at the moment. I don't see a lot of upside from here from the Solana cryptocurrency, even if the blockchain itself thrives.
