According to a Bank of America analyst, the Solana blockchain is so inexpensive, fast, and scalable that it may be the Visa of crypto networks.
As a platform for trading and releasing digital assets, Defi applications, and trading protocols, Solana competes with Ethereum and other “Layer 1” blockchains. It’s booming for non-fungible tokens or NFTs.
According to Defi Llama, it has racked up more than $50 billion in transactions on its network since its introduction in March 2020, with $10 billion worth of crypto being locked on it.
Solana’s speed, affordability, and scalability are what make it so dangerous to establish financial networks. The network is based on a “proof of stake” consensus process, which requires far less computer power than the present version of Ethereum, which, like Bitcoin, relies on a “proof of work” consensus mechanism to validate transactions.
Solana has an industry-leading TPS of 65,000 transactions per second. (At the moment, it’s doing 1,954 transactions every second.) Its transaction fees are extremely low, averaging $0.00025 for each transaction.
Solana claims that because of its scalability, both developers and consumers will pay less than $0.01 per transaction. Ethereum, on the other hand, is now processing 16 transactions per second at an average cost of $14 per transaction, according to reports.
Given its low cost, speed, and scalability, Solana “could become the Visa of the digital asset ecosystem,” said Alkesh Shah, head of digital asset strategy at Bank of America, in a note published on Tuesday.
Solana has incorporated a “proof of history” method and other changes, according to Shah, which might boost performance and increase use-cases. According to him, the network is home to more than 400 projects, including Serum, a high-frequency trading platform, and Metaplex, an app for constructing and hosting NFT stores.
According to Shah, a music-streaming platform called Audius is being built on Solana, allowing song owners to retain certain ownership rights to their works.
There are some obstacles to Solana’s widespread acceptance. The network, which is administered by the Solana Foundation in Switzerland, has experienced some outages and performance concerns. Its network is now less decentralized than Ethereum’s, making it more prone to security flaws and breaches.