Comprehensive Analysis of Solana Project: Fundamentals and Price Forecast
What is Solana?
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Figure one – TPS Solana 08/09/21
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Figure two – Ethereum gas fees over time
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Creation of Solana and Token Issuance
PoH was primarily created by Anatoly Yakovenko, the founder and CEO of Solana. In 2017, Yakovenko published his PoH draft. Previously working as an engineer for Dropbox, Qualcomm, and D2iQ in the San Francisco Bay Area, Yakovenko collaborated with his old colleagues at Qualcomm to further refine the PoH draft, eventually establishing Solana Labs in 2018. Solana Labs set out to raise funds through a private token sale, culminating in a Solana ICO in March 2020.
Despite the market being in freefall, the Solana ICO managed to raise $25.66M/$29.28M (88%). Just a few days before the Solana ICO, there was a massive sell-off in both the cryptocurrency market and traditional markets due to the fear of COVID19. Traditional financial markets are closed, but the cryptocurrency market never stops. In just one month, the cryptocurrency market lost 65% of its value, from $306 billion to just $108 billion, as the chart below shows.
Figure three – cryptocurrency market crash, same period as Solana ICO
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Solana Roadmap
Since 2018, Solana has completed almost all elements of its original roadmap, completing the following.
2018
Publish white paper
Single Node Private Test
Multi-node privacy test
Publish payment SDK
Publish smart contract SDK
2019
On-chain program
Implement the Libra virtual machine
Release multi-region, multi-cloud testnet
Release Incentivized Testnet – LATE
2020
Release the beta version of the mainnet
The last piece of the Solana roadmap to be completed is the launch of the Solana mainnet. With the Solana mainnet launch, let’s evaluate Solana’s historical price performance.
Solana's Historical Price Performance
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Figure four – SOL saw an instant sell-off, falling from $1 USD to $0.5 losing 50% of its value.
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Figure five – SOL increased almost +1000% from the $0.5 USD level.
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Figure six – SOL historical price action.
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Solana Social Media Analysis – Solana Community
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Figure seven – Solana reached an ATH LunarCrush social score of 89,393 in May 2021
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Figure eight – BTC reached a bearish social sentiment ATH during the 2021 crash.
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Figure nine – Bitcoin vs Solana Bullish: Bearish Ratio Social Sentiment
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Figure ten – Bullish:Bearish Ratio Social Sentiment
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Why is the cryptocurrency community so bullish on Solana?
Ethereum has been the top cryptocurrency for quite some time when it comes to smart contracts. Numerous cryptocurrencies utilize the Ethereum blockchain, which is a hub for decentralized applications. However, throughout its history, Ethereum has struggled with scalability. This scalability struggle of Ethereum is a real problem. In order to alleviate network congestion, Ethereum launched an upgraded version of the London hard fork in 2021, trying to solve the current problems, especially the problem of gas fees. Problems on Ethereum have led to the creation of many layer 1 solutions, so-called "Ethereum Killers".
Ethereum Killer was created in an attempt to create a blockchain superior to Ethereum, with projects attempting to improve speed, security, and scalability. Many Ethereum killer projects have been developed, eg.
NEO、EOS、AVAX、NAS、COSMOS、DOT、ADA、BSC
Many of these projects command significant market share. However, Ethereum still dominates. Currently, the main problem with most Ethereum killers is the lack of usability, with the low number of projects being built on their respective blockchains. Solana seems to have bucked that trend...
At the time of writing, Solana appears to be the first project to actually solve the blockchain triangle problem. This has allowed many excellent projects to be built and is one of the main reasons why the Solana community is so bullish. Solana has unlocked the potential of blockchain technology.
Solana Ecosystem
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Figure eleven – types of projects built on Solana
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Figure twelve – Size of cryptocurrency ecosystems
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Figure thirteen – high market cap cryptocurrencies built on Solana
Since the release of Serum in 2019, many new cryptocurrency projects have been added to the Solana ecosystem with funding from Solana Labs. In June 2021, Solana conducted a $314 million private token sale. This private funding will be used to further develop the ecosystem, enabling Solana to reach the goal of 1 billion users.
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Figure fourteen – many cryptocurrencies built on Solana have seen major valuation increases in recent months
The Solana Ecosystem – DeFi Dominance
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Figure fifteen – DeFi currently dominating Solana
Solana DeFi projects are generally very user friendly and easy to use. Some of the reasons for this are due to the following factors.
Solana Explorer allows users to easily view transactions as they occur
Many Solana products include a clickable link that allows users to view their transactions in real time.
Step Finance removes the need for cryptocurrency users to create spreadsheets when managing their investments in DeFi. Instead, users now have a platform with access to yield farming, wallets, spot positions, and more.
The Solana ecosystem is highly integrated, increasing usability and functionality for users.
Solana's speed enables users to transact with ease.
Solana's high TPS enables users to perform activities such as yield farming quickly and easily.
almost zero cost
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Figure sixteen – TVL locked within Solana DeFi products is increasing rapidly
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Figure seventeen- Yield Farming on SolFarm TVL increase
APY of Solana DeFi products
The Solana DeFi product attracts users due to its ease of use and other factors mentioned earlier. However, Solana’s massive attraction of users to its DeFi protocol is also due to the financial incentive to see early adopters of Solana DeFi. For example, in the figure below, we can see that DEX ORCA provides a very competitive annual interest rate for many Solana products. Also, some of these pools can be "double soaked". This can be rewarded with additional tokens.
Figure eighteen – ORCA APYs
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Figure nineteen – power of compounding
In fact, this 179% annual interest rate will not be maintained. As liquidity increases, the APR offered will decrease. Also, the chart does not take into account changes in ORCA price, nor does it take into account whether the pool will last for 6 years...however, it does show why these pools are attractive to users. Daily compounding is possible due to Solana's speed and low transaction costs. This allows users to reinvest daily interest rewards, further increasing the power of compound interest.
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Figure twenty- POLIS / RAY LP SolFarm X3 farming leverage example
Rug pulls
Other DeFi products do offer extremely high APYs, as seen with Solana products. For example, in the image below, we can see that PancakeSwap currently has a GNT-BNB breeding pool offering 483% APY.
Figure twenty one- PancakeSwap high APY example
However, a common problem with these high APR products is "rug pulls".
Rug pulls are when malicious developers take away investors' funds and abandon related projects.
This is a prominent issue within the cryptocurrency industry right now, especially Binance Smart Chain. Below is a list of some of the carpet pulls happening across the industry.
Antisocial Finance
Meerkat Finance
Honey Swap
WallStreetSwap
Tin Finance
Minter Pro
Potatoes Finance
Tetris Finance
GoldenFarm
ChessFarm.Tech
Beer Garden
Vice.Uno
Amplyfi.money
UniCat
Thodex
PolyButterfly
As the status of mainstream early-stage cryptocurrencies increases, those with bad intentions often flock to new investors rushing in, trying to take their funds away as users FOMO buy in. So far, Solana has only seen one Rug pull for the cryptocurrency project Luna Yield. Luna Yield was marketed as a legal item and launched on Sol Pad. This `team` provides the documentation required to qualify for SolPad IDO. However, they ran away with $6.7 million worth of user cryptocurrencies shortly after the project went live.
Currently, Rug pulls are not a major issue within the Solana ecosystem. However, as Solana's popularity has increased dramatically, malicious actors may attempt to infiltrate the ecosystem despite ongoing efforts to prevent it.
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SolanaSummary
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About AAX Academy
AAX is a digital asset exchange powered by LSEG Technology. AAX Academy is a user education channel created by AAX, which aims to help more users learn novice tutorials and understand the basics of blockchain.
