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Solana (SOL-USD) was one of the best-performing cryptocurrencies in 2021 when it rose from ~$2 in early 2021 to more than $250 by November 2021. Since then, Solana’s native currency SOL retraced ~80% from its high to $50 currently. Over the past ten days, the price dropped ~32%, fueled by the broader crypto market selloff stemming from Terra’s UST-USD and LUNA-USD collapse.
The sharp selloff in SOL-USD presents a great medium-term entry point for anyone who missed the boat during 2021. Fundamentals remain strong, and the outlook is bright.
Solana will be a relative outperformer over the coming years as crypto mass-adopters find utility in the growing Solana ecosystem of NFT marketplaces, DeFi, payment systems and gaming apps. Solana is built to handle wide-scale adoption of Web3 decentralized apps.
Data by YCharts
Solana Is Structurally Different
Solana is structurally different than most blockchains. Solana is capable of handling high transactions per second capacity (currently 60,000 TPS, with the potential to scale to several hundred thousand TPS in the future), cheap, and lightning fast (transactions confirm in seconds rather than minutes and hours).
So this idea that you can write a bunch of code and change the world [was something] that I believed in, saw that happened with Google, with Facebook, with Amazon. So it’s always there. I’m glad that I have the opportunity to take a stab at it.
– Anatoly Yakovenko, Solana Co-Founder in an interview with FTX
High Transactions Per Second Throughput
Bitcoin (BTC-USD) is capable of 7 TPS and Ethereum (ETH-USD) is capable of 15 TPS – both networks require Layer 2 scaling solutions (for example, Bitcoin Lightning and Polygon (MATIC-USD)) to break through these structural barriers. Solana currently does not require a Layer 2 scaling solution. Many crypto users switched to Solana after Ethereum congestion issues in 2021.
Some bears have pointed to the network congestion issues that hampered the Solana network during 2022 as a reason to doubt the true TPS potential. Core developers are focused on addressing the issues, and it is important to note that none of the issues appear to be structural. Hiccups and growing pains are fairly common among emerging new technologies.
Solana Is Cheap To Use
Solana network fees are fairly stable and cheap. Most transactions cost less than a penny, and there are no unpredictable sharp swings. We all can remember the days of 2021 when Ethereum gas fees looked scarier than a natural gas chart (I can still remember trying to send a friend an NFT on Ethereum mainnet at one point when gas fees were over $600… it was not a CryptoPunk, so I had to wait well over a week for fees to moderate to “reasonable” levels).
Predictability and stability in fees are very important for all market participants. Imagine trying to trade Tesla (TSLA) when your broker commission could vary between $0 and $600. As a trader, you want clarity on your transaction costs. As a broker, you want pricing stability so you can better plan medium and long-term investments for the business. John D Rockefeller’s assistance in providing oil price stability was credited with increasing oil adoption rates. The same concept applies to crypto.
High gas fees and unpredictable fee swings were given a pass during the bull market run of 2018 to 2021. The stability of fees will become a critical differentiator as crypto goes mainstream – many next generation Web3 apps require high transaction velocity (for example, blockchain GameFi and payment systems).
Lightning Fast
Solana’s network is able to confirm transactions in a matter of seconds, rather than minutes and hours on other networks. This factor is very important for the average consumer who is accustomed to instant gratification and gigabyte internet speeds.
The median consumer cares most about the experience and cost, not the underlying technical wizardry of the blockchain and why it needs to take minutes or hours to confirm a transaction.
Crypto Is Now Established
Solana is perfectly positioned for a large influx of crypto users as the penetration rate S-Curve accelerates with mainstream adoption. The network is built for high throughput and speed.
The average consumer is well-aware of crypto, and many central banks and governments have come to the conclusion that embracing blockchain technology is a better bet than taking a hostile approach and being left in the dust. Europe is still trying to catch-up with Asia and North America after missing the tech wave – politicians have acknowledged they do not want to make the same mistake with blockchain.
We see crypto adoption accelerating through 2030 to over one billion global users as the adoption S-curve rate continues increasing.
Similar to the adoption cycle of smartphones, most people will soon integrate blockchain technology into their daily lives – the same technology they first perceived as too complicated to use.
More Developers Are Focusing On Solana And Rust
Solana’s core smart contract language is Rust, which is a very efficient and fast low-level programming language. Ethereum and EVM-compatible blockchains use Solidity.
The bulk of today’s Web3 developers are using Solidity, but the Rust’s growth rate is faster and it is gaining ground quickly. Rust has been Stack Overflow’s most loved language for four consecutive years.
rust is a perfect programming language
– @jack December 24, 2021
An increasing number of Solana developer tools are emerging, which helps onboard newcomers. The Anchor framework, created by Armani Ferrante, is one of the more helpful tools that many Solana developers use to create Rust smart contracts. Anchor enables developers to build and ship apps faster by handling much of the low-level code and security logic.
Developers are branching out. Growth rate of ecosystems outside Bitcoin and Ethereum was meaningfully faster than Bitcoin and Ethereum
Solana experienced the largest rate of growth – the number of developers increased by ~5x
Risks
Cryptocurrencies are volatile, and bear markets can persist for many years. The recent bear market started in November 2021, which is less than one year ago. A new bull run could take several months or longer to start. Our thesis is a three to five year view.
Solana congestion issues affected the network in 2022. Users and developers could find alternatives if these issues persist or take longer than expected to address.
The S-Curve adoption rate is difficult to forecast accurately with secular growth sectors. The adoption rate curve could be less steep than anticipated, which would imply lower growth rates.
Valuation
We believe SOL-USD will reach new highs above its prior peak of ~$250 in coming years (implies a market capitalization of ~$135 billion). Solana can be seen as a combination of a cloud services provider, payments processor and a fiat currency combined.
Solana’s current fully diluted market capitalization is under $30 billion, which makes it attractive relative to public equities in these sectors. The total market cap of the three largest traditional payment processors is just shy of $1 trillion: Visa (V) $438 billion, Mastercard (MA) at $327 billion and American Express (AXP) at $121 billion.
Comparison of cryptocurrency market capitalization to equities is not apples-to-apples because cryptocurrencies also offer consumers a native coin that is a store of value similar to paper money, gold (GLD), and silver (SLV). Also, payment processors can charge higher fees than Solana due to the consolidated market structure.
Cryptocurrencies store value with a defined inflation schedule determined by computer code. As the quantity of fiat money printed continues to outpace cryptocurrency inflation rates, cryptocurrencies should see relative price appreciation all else equal.
As of today, Coinmarketcap estimates the total cryptocurrency market cap is $1.3 trillion. This is down more than 50% from the peak of > $2.5 trillion in late 2021. While $1.3 trillion sounds like a large number, it is still a drop in the bucket compared traditional global financial markets.
Conclusion
We are very optimistic on the future of Solana and the broader crypto space. The recent pullback offers newcomers a great medium-term entry point to gain exposure to one of the best-positioned blockchains in the coming years.
Solana’s growing ecosystem of DeFi apps, NFT marketplaces, payment systems and GameFi apps will continue attracting the expanding population of crypto newcomers.
Today, Tulip Protocol made the announcement that they have integrated Chainlink Price Feeds in order to better secure their yield aggregating platform that is running on the Solana mainnet. The team had previously stated their intention to integrate Chainlink Price Feeds, and at this point, the connection has been completely put into action. Chainlink is the premier decentralized oracle network in the world, safeguarding tens of billions of dollars in smart contracts. It has diversified its offerings across other blockchains, notably Solana, Fantom, Polygon, BNB Chain, and others.
In a recent blog post, the team behind the Tulip Protocol explained that they had integrated Chainlink to provide users with more confidence that leveraged positions will be liquidated equitably using extremely accurate price data and that the protocol will continue to be completely collateralized at all times.
According to Tomasz Wojewoda, Head of Global Sales at Chainlink Labs:
“We’re pleased that Tulip Protocol has integrated Chainlink Price Feeds on Solana, helping secure its yield aggregation protocol with highly robust, decentralized market data. With the high-throughput performance of Solana and the strong security guarantees of the Chainlink Network, Tulip Protocol is able to empower users with a performant and secure platform.”
Tulip Protocol Seeks To Take Advantage Of Solana
Tulip Protocol brings together lenders who receive a return on their deposits and borrowers who are interested in gaining access to leverage. Users who initiate leverage positions are responsible for maintaining a loan-to-value (LTV) ratio that has been previously established. The Tulip Protocol then uses the asset price data that is provided by Chainlink Price Feeds to verify that this ratio is accurate. If the value of the collateral falls below the threshold that was established by the protocol, then their position will be immediately liquidated to assist in guaranteeing that the lenders will be repaid.
Tulip Protocol intends to capitalize on Solana by giving users the ability to more regularly reinvest their income and grow their assets without having to pay exorbitant amounts of gas expenses. Chainlink oracles can now be natively integrated on Solana, making it possible for Solana-based applications to benefit from enhanced levels of security and transparency. Yesterday, OpenOcean made the announcement that they would be integrating Chainlink Price Feeds in order to help secure the limited order functionality on many chains. These chains include Avalanche, Ethereum, Polygon, Fantom, and BNB Chain.
According to Senx, Co-Founder of Tulip Protocol:
“We’re excited to be using Chainlink Price Feeds on Solana to help secure our yield aggregation platform. By leveraging the most secure and reliable on-chain data available, we’re able to provide our lenders and borrowers with greater assurances that liquidations are based on accurate price data, and the protocol will maintain a healthy loan-to-value ratio through all market conditions.”
Allowing Stakers To Benefit From Higher APYs
Natives of the blockchain as well as newcomers to the technology are beginning to understand that decentralization does not necessarily equate to a secure platform. Given that Web3 services are currently disclosing their susceptibilities to attacks from both within and outside the network, further initiatives should be undertaken to improve the safety of user assets. Fortunately, a growing number of blockchain businesses are beginning to add various levels of security to their services in order to solidify the trust of their existing customers and attract additional investors in the near and distant future.
Tulip Protocol is the very first yield aggregation platform to be built on Solana, and it features auto-compounding vault techniques. The dApp was developed to make use of Solana’s blockchain, which has a low cost and high efficiency, hence enabling the vault techniques to compound frequently. Stakeholders are able to reap the benefits of greater APYs as a result, without the need for active management.
On this week’s episode of “The Market Report,” Cointelegraph’s resident experts discuss the latest updates concerning the recent Solana (SOL) hack.
To kick things off, we broke down the latest news in the markets this week:
Bitcoin realized price bands form key resistance as bulls lose $24K, significant whale activity between $22,000 and $24,800 adds to the complexity of the current spot market setup. Bitcoin (BTC) consolidated lower on Aug. 9 after familiar resistance preserved a multi-month trading range. When will we finally break out of this price range and make the move towards $30K?
Institutions flocking to Ethereum for 7 straight weeks as Merge nears: Report, “Greater clarity” around the Merge has driven institutional inflows into Ethereum products, according to a CoinShares report. Is the ETH merge finally around the corner and will it bring new all time highs to ETH or has the price already been factored into the current price?
Circle freezes blacklisted Tornado Cash smart contract addresses, Crypto data aggregator Dune Analytics said that, on Monday, Circle, the issuer of the USD Coin (USDC) stablecoin, froze over 75,000 USDC worth of funds linked to the 44 Tornado Cash addresses sanctioned by the U.S. Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons (SDN) list. Could this mark the end for Tornado Cash or is there a way they can redeem themselves?
Next up is a new segment called “Quick Crypto Tips,” which aims to give newcomers to the crypto industry quick and easy tips to get the most out of their experience. This week’s tip: Have some funds ready to buy further downturns.
Market expert Marcel Pechman then carefully examines the Bitcoin and Ether (ETH) markets. Are the current market conditions bullish or bearish? What is the outlook for the next few months? Pechman is here to break it down. The experts also go over some markets news to bring you up to date on the latest regarding the top two cryptocurrencies.
After Marcel’s market analysis, our resident experts discuss whether your SOL is safe and the latest updates on the Solana hack. We also discuss why the network has been victim to so many hacks and downtimes. What exactly do these exploits mean for the Solana platform and if you should be worried.
Lastly, we’ve got insights from Cointelegraph Markets Pro, a platform for crypto traders who want to stay one step ahead of the market. The analysts use Cointelegraph Markets Pro to identify two altcoins that stood out this week: Radicle’s RAD and DigiByte’s DGB.
Do you have a question about a coin or topic not covered here? Don’t worry. Join the YouTube chat room, and write your questions there. The person with the most interesting comment or question will be given a 1 month free subscription to markets Pro worth $100!
The Market Report streams live every Tuesday at 12:00 pm ET (4:00 pm UTC), so be sure to head on over to Cointelegraph’s YouTube page and smash those like and subscribe buttons for all our future videos and updates.
Singapore, Singapore , Aug. 09, 2022 (GLOBE NEWSWIRE) — Today, the ZepetoX team (ZTX, ZepetoX.io) announced its foray into the web3 space, sharing its vision to build an open world that empowers creators and communities to build, play and earn.
ZepetoX is the crypto metaverse initiative jointly incubated by ZEPETO – Asia’s largest metaverse platform with over 320 million registered users – alongside leading global blockchain organizations including Jump Crypto.
As the sole blockchain project comprehensively backed by ZEPETO, ZepetoX will have exclusive ties to ZEPETO in terms of IP including technological, design, and content assets as well as bridges to facilitate user onboarding between the two platforms. ZepetoX’s blockchain development efforts will be advised by Jump.
“ZepetoX is our official venture into the blockchain industry. We feel that web3 opportunities should be advanced through a crypto-native approach, which is why we are excited to have Jump as a contributor to developing a new platform that would have exclusive connections to ZEPETO. Overall, we believe that ZepetoX can build the ideal web3 platform to not only bring blockchain to our existing users but also to expand our footprint in the blockchain space through various disruptive initiatives,” said Daewook Kim, CEO of Naver Z – the operating entity of ZEPETO.
“We are excited to support ZepetoX’s efforts aimed at onboarding new audiences into the rapidly growing crypto space. ZEPETO’s expertise and technological know-hows accumulated over the past years from building an immersive social platform will serve as a springboard for ZepetoX,” said Saurabh Sharma, Partner at Jump Crypto.
Building on the Solana network, ZepetoX will offer a web-based 3D open world with varying levels of gamification integrated as well as opportunities for users to monetize via ownership of digital assets and social interaction. Ultimately, ZepetoX aims to empower self-expression through customizable avatars and lands that can be equipped with NFTs from a rich collection of assets created by diverse creators, DAOs, or communities.
“I am thrilled to see IP powerhouses like ZepetoX choosing to build their metaverse on Solana,” said Anatoly Yakovenko, Co-Founder of Solana. “Projects like ZepetoX create new pathways for onboarding millions of users to web3.”
“Our global team brings a depth of crypto native experiences and our goal is to build on the foundation of ZEPETO to spearhead the adoption of blockchain among metaverse users, developers, and creators,” said co-CEO of ZepetoX, Chris Chang.
In the coming months, ZepetoX will launch its first land sale. The lands will be tradable on the ZepetoX marketplace, which will feature a variety of different NFTs as the open world project evolves. Further details on the sale will be available on the ZepetoX website in the coming weeks.
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About ZepetoX: ZepetoX (ZTX) is a web3 company building an immersive content-driven platform for users to create, trade digital assets and enjoy social interaction. Founded in 2022, ZepetoX is the blockchain initiative of ZEPETO, widely regarded as the largest Asia-based metaverse platform boasting over 320 million lifetime users with over 2.5 billion virtual fashion items sold.
