In this educational guide, we’re going to explore the altcoin and blockchain named Solana (SOL). We’ll cover its fundamentals and planned roadmap, so you can use it to make your own price prediction.
What is Solana and how does it work?
Solana is a major public blockchain, similar to how Ethereum functions. However, what makes Solana unique is its optimizations for scalability. Solana’s goal is to enable developers to create decentralized apps (dApps) that can more easily support billions of users on its network due to being able to design around performance bottlenecks that exist in other current major blockchains.
To this end, Solana uses a unique model referred to as Proof-of-History (PoH) which enables transactions to be automatically ordered. It also leverages the use of Proof-of-Stake (PoS) consensus algorithm which helps to secure the network. Compared to Ethereum which as of Q2 2022 can take up to 10 minutes to settle transactions and frequently requires users to pay gas or transaction fees upwards of $20 or higher for simple transactions, Solana features sub-second transaction settlement times and extremely low transaction costs.
Bitcoin and Ethereum have some limitations in their scalability due to the time required to reach a consensus based on the order of transactions. Solana’s creator, Anatoly Yakovenko, believed that his new timekeeping technique of Proof-of-History (PoH) could automate the transaction ordering process for blockchains which could make the actual consensus process faster, allowing for more scalability in turn.
The Solana founding team boasts former Apple engineers, Qualcomm veteran employees, and other skilled individuals which became known collectively as Solana Labs and raised significant funding. Solana’s mainnet beta released in March of 2020 with smart contract support at launch.
The Solana Foundation is a Swiss non-profit organization that is responsible for the governance and changes to the Solana network. This means that unlike other blockchains, Solana holders do not have any say in governance changes to the network. However, the Solana code is open source and allows developers to contribute and provide input on proposals for updates. Solana does however have a delegated proof-of-stake system whereby token holders can select the validator set.
Other technological advantages that Solana offers over other blockchains includes:
- Turbine, for transmitting blocks between validators faster. This helps further increase the speed of the network.
- Gulf Stream, which is a mempool-less transaction forwarding protocol. This means it is faster for validators to do their job on the network than on Ethereum which lacks this functionality.
- Sealevel, which is a transaction processing engine that helps Solana scale horizontally across GPUs and SSDs. This is another advanced and novel way that Solana is able to achieve faster throughput than other blockchains.
- Pipeline, Cloudbreak, and Archivers are additional advantages Solana has for scaling transaction processing, optimization validation on the network, and for distributed storage on its ledger via archivers.
Solana’s SOL Token
The SOL token itself is a native token that runs on the Solana network as a native currency for the use of payments on the network.
SOL can also be staked to receive rewards in SOL for contributing to security of the network. Solana validators can stake their SOL directly, or holders of SOL can also delegate their holdings to validators. Inflation pays for staking rewards to both validators and associated delegators.
Token Distribution
SOL tokens are inflationary and initially there were 500 million tokens created at genesis. As for ongoing inflation, Solana validators had voted to enable what is referred to as “pico-inflation” in Dec 2020. This meant that the supply of SOL would inflate at an annual rate of 0.1% only.
Newly minted SOL tokens go to validators and stakers in proportion to their staking amount. This initial inflation rate was meant to be temporary and was replaced by a new inflation proposal in 2021. Solana also burned 11 million SOL tokens after genesis, which brought the total supply at the time down to 488M SOL.
Solana’s inflation was later set at 8%, with the inflation rate being reduced 15% year on year until it settles into a long-term inflation rate of 1.5%. This means that the total supply of SOL tokens should reach 550M after 2 years of the network being live, and 700M SOL during the 8th year. However, this inflation rate does not account for any burned SOL, which can happen at the discretion of the Solana Foundation.
The Solana team distributed tokens in five funding rounds, one of which was a public sale. The other four preceding rounds were private sales. Many venture capital firms in the crypto industry participated in the private sales, including names like BlockTower Capital, Foundation Capital, Blockchange VC, Slow Ventures, NEO Global Capital, Passport Capital, and others. These private investors received SOL tokens in exchange for their initial investments, but there is some controversy as the number of tokens they received was not disclosed to the public.
The first three private sales all involved a nine-month lockup period after the launch of the network commenced. The public sale did not involve any lockup and those tokens were liquid at the launch of the network. Notably, the allocation given to the founding team is subject to a nine-month lockup post launch of the network and these tokens also vest monthly for two years, which means they are fully vested by January of 2023.
The public tokens sale was facilitated in March of 2020 through the CoinList platform. The initial distribution of SOL tokens was as follows:
- 15.86% of SOL went to Seed Round investors
- 2.63% went to Founding Sales investors
- 5.07% went to Validator Sale investors
- 1.84% went to Strategic Sale investors—this was the fourth and last private sale in Feb of 2020
- 1.6% went to public auction investors from CoinList
- 12.5% went to the team
- 12.5% additionally went to the Solana Foundation for the purpose of funding continued development on the network and to balance the voting power of validators
- 38% went to the community reserve fund, which is managed by the Solana Foundation. This serves to fund community initiatives and application developers on Solana.
Source: Messari.io
Solana (SOL) Price History & Technical Analysis
As of the time of writing, in April 2022, the price of SOL is at $107.23, with a market capitalization of $33.8 billion USD.
The total value of the SOL token and other associated ecosystem tokens in turn grows as the user adoption of the Solana network continues to grow by both developers and users as per Metcalfe’s Law.
Metcalfe’s Law states that the value of a network is directly related to the number of users of that network. Recent times have seen significant funding incentives and development activity come to Solana, with many decentralized applications (dApps) and more coming to the network.
Hence, if Solana continues to innovate with its technological advantages, the SOL token will continue to do well, especially as there is more demand for the token on the open market and given its overall low inflation and occasional burning, which adds further dis-inflationary effects.
What Expert Analysts say about Solana:
- Wallet Investor says, “If you are looking for virtual currencies with good return, SOL can be a profitable investment option. Solana price equal to 107.160 USD at 2022-04-19. If you buy Solana for 100 dollars today, you will get a total of 0.933 SOL. Based on our forecasts, a long-term increase is expected, the price prognosis for 2027-04-17 is 726.904 US Dollars. With a 5-year investment, the revenue is expected to be around +578.34%. Your current $100 investment may be up to $678.34 in 2027.”
- Coinpedia says, “Over the next five years, If Solana encourages newer upcoming startups, it could be a new competitor for other currencies in the market. Also, in the coming years, if Solana outgrows Ethereum, it might bang at significant highs. On this note, the SOL price may strike at $710.14.
New regulations in the future can afflict the price movements, and thereby a possible low might be in hand for SOL. If this happens, a slight pullback can draw Solana to $212.08 by the end of the next five years.” - DigitalCoinPrice gives a bullish SOL coin price prediction for 2022: “As per the forecast data analysis, the price of SOL is expected to cross the level of $132.94. By the end of the year, Solana is expected to reach a minimum fee of $129.39. In addition, the SOL price is capable of getting a maximum level of $151.24. Investors and holders of crypto assets must know the Solana Price Prediction 2022.”
Solana Partnerships
Solana has forged a lot of strong partnerships across key leaders in the crypto industry and fostered integrations with several wallet providers as well as incentivized developers to build some top DeFi applications.
Prominent DeFi apps on Solana today include Orca, Saber, Serum, Raydium, and Mango Markets. All of these allow users on Solana to participate in financial activities such as lending, borrowing, trading, asset exchange, and others in a decentralized manner.
Solana has also nurtured several NFT marketplaces that leverage the network’s low transaction fees and high speed—these include names like Metaplex, Solanart, Magic Eden, Solsea, DigitalEyes, and others.
As far as partners, Solana has forged several. Ones of note are with Audius to scale emergent artists to end users. FTX is the most notable partner of Solana as one of the leading crypto exchanges on the market. Alameda Research is a major crypto market maker and institutional party that also backs Solana alongside FTX and the Solana Foundation. Tether has brought its USDT stablecoin to the Solana network as well.
Other partnerships that Solana has forged include with Chainlink to bring realtime oracle data to Solana, with Brave Browser to integrate the blockchain in its browser, and metaverse projects with Star Atlas, DeFi Land, and others.
Solana Price Prediction: 2022-2026
Solana’s SOL token first saw significant bullish price pressure during the beginning of 2021 alongside the rest of the cryptocurrency markets, setting a peak of almost $60 in May, only to then drop back down to the $20 area for support, which it held successfully multiple times.
As the crypto markets lost traction during the summer of 2021, the Solana price also suffered, but then overtook the attention of almost every other coin and saw rapid appreciation starting in July 2021, to get to a peak of almost $260 during the fall of 2021.
Since then, the crypto markets have been turbulent during 2022, and the price of SOL has suffered but held the $80 price point, now forming some support there.
As of the time of writing, the price of SOL remains in this macro area between $100-140. On the weekly chart shown above, SOL continues to maintain support and should see price appreciation to come as long as the low in the $80 area is held.
As long as the SOL price remains above the $80 area, it is likely that SOL will regain price strength and continue to set new all-time highs until the trend changes.
It’s uncertain to say when investors can expect the previous all-time-high to be breached again, and fundamental factors will also have a play in this, since the SOL price tends to be especially sensitive to funding and development news, being that it is now a major alternative blockchain. It is also possible that a greater economic contraction will occur that leads to overall losses in the cryptocurrency markets. If a contraction occurs and the SOL price loses the $80 area, we expect it to take even longer for a new high to be reached.
Solana Price Prediction 2022
Some analysts predict that SOL will see beyond its previous all-time high during 2022 itself, since the price action is currently holding up fine and the protocol continues to see growth in users as well as the growth of the Solana Wormhole bridge.
We think it is reasonable that if bullish price pressure for SOL remains despite the overall lull in the crypto markets, SOL can see higher prices. But to do so, it will first have to take out the last high on the weekly chart above at the $140 area.
Solana Price Prediction 2023
If SOL remains a popular blockchain for users of DeFi and NFTs alike, as well as for developers that are given incentives and funding to continue development on the protocol, and if additionally the crypto markets remain bullish, SOL can see a target of potentially $200-250 by 2023.
Solana Price Prediction 2024
The overall growth of the cryptocurrency markets will contribute to SOL’s growth, as well as the greater trend of blockchains that are competing with Ethereum. It should be noted that the growth of Layer-2 scaling solutions as well as scaling technology from the upgrade of Ethereum 2.0 has the potential to eat into SOL’s competitive growth, but Solana also has major venture investors and is almost synonymous with the FTX crypto brand at this time, so the dynamics of the competition are uncertain to predict.
The market capitalization remains at $33.8 billion in April 2022, and a reasonable 2-4x to reach $66-132 billion in market cap by 2024 would put the SOL price at $212-$424 price range or higher by 2024.
It’s not unreasonable to see SOL hit these prices or higher by 2024 with continued innovation and development of the network and the technological improvements that continue to come. Of course, this is also provided the overall crypto market remains bullish and we can avoid an economic downturn and bear market overall. In this scenario, it is even possible that Solana becomes a true “Ethereum alternative” and sees the sort of growth that Ethereum saw from 2016-2022.
Solana Price Prediction 2025
2025 is still far away at the time of this writing and longer term blockchain and Layer-1 blockchain and Layer-2 scaling solution trends are impossible to predict. However, the growth of user adoption of blockchains overall, of crypto, and the market’s need for greater throughput solutions that Solana solves over Ethereum will only increase. Plus, there is a lot of capital backing Solana development.
We predict we will see SOL at $300-400 or above by 2025, but it’s entirely possible, albeit a small chance, that SOL could become relatively irrelevant if Ethereum 2.0 succeeds and takes all market share away from competing Layer-1 blockchains such as Solana, or if a new Layer-1 and Layer-2 ecosystem takes hold of the market.
Solana Price Prediction 2026
The crypto market overall could be worth $10T or even as high as $15T in total market capitalization by 2026. Depending on regulations and the overall economic cycles of the economy, we may see SOL as high as $500-$600 by 2026, provided development and innovation of Solana continues.
None of these predictions are financial advice, and are educated guesses as to where SOL’s price may be at each time interval. It should be noted that any black swan events such as a catastrophic failure of the Solana consensus and excessive downtime (which has already happened but not yet affected the price significantly yet), a major hack (the Solana Wormhole bridge has already been hacked once), a cease in development, or other black swan events could impact these predictions significantly.
Solana (SOL): Conclusion Price Prediction
Solana is one of the major alternative Layer-1 blockchains on the market today in terms of funding and development, and its strong price action was reflective of that throughout 2021. Solana clearly offers some significant technological advantages over other blockchains such as Ethereum and Bitcoin, which help increase speed, throughput, and usability for both developers and users alike. At the moment, unlike some other competing blockchains, Solana is not EMV-compatible and requires developers to learn different programming languages, which can be considered somewhat of a limitation that may impact its growth. However, solutions for this can be developed.
SOL continues to hold price support near the $80 area which looks bullish, though its current all-time highs are still far off. It is actively still seeing user growth, new partnerships, and more key innovations coming online such as accelerated dApp development as well as an investing arm and trading desk for the Solana network.
The Solana CEO recently stated that the next phase is to onboard a billion users onto Solana and Solana can accommodate this scale as it stands. Given the immense funding behind the project, Solana Labs could be considered well-positioned to build the right products and tooling to achieve this goal.
Of course, the long term outlook of any cryptocurrency is hard to say for certain, however provided that SOL sees continued development and user growth, as well as developer growth thanks to its incentives and growing dApp ecosystem, it is likely to remain a strong choice of investment for the foreseeable future.
Some may be hesitant to commit their money into an asset for an extended period of time due to the extreme volatility and risk of the cryptocurrency markets. Plus, it is impossible to say for certain which blockchain will win the scaling wars longer term, or if they all have a place in different sectors of the market. Solana investors should keep tuned to any market news about upcoming technological developments and catalysts.
FAQs
How is Solana gaining traction?
The SOL token is gaining traction thanks to its native Solana blockchain being a strong contender in the overall blockchain scaling wars, competing with Ethereum and others. Solana took off in terms of user traction and price both during 2021, backed by strong incentives and capital from major crypto market players such as FTX and Alameda Research. Solana is gaining traction thanks to being a high throughput blockchain during a time of high Ethereum gas fees, as well as developer and user incentives, offering an easy-to-use bridge called Wormhole to bring liquidity from Ethereum, and as a result, the project continues to do well.
Investors and market participants were interested in its token, SOL, due to the innovation the protocol offers, the unique token schedule that SOL offers, and many other reasons that will contribute to the growth of the Solana blockchain.
Where can I buy Solana (SOL)?
SOL can be purchased and traded on many exchanges including Coinbase, Binance, FTX, KuCoin, Kraken, Bitfinex, Bybit, and others. This means that both US and international investors can invest in SOL.
In comparison to other cryptocurrencies, how can Solana secure privacy?
As far as privacy goes, SOL is a public blockchain so privacy should not be overly expected. All transactions are recorded in the Solana ledger of transactions. Privacy is not guaranteed, especially in comparison to other cryptocurrencies or blockchains that are especially known for securing privacy, such as Monero.
Is it possible to stake Solana (SOL) tokens?
Yes, SOL tokens can be staked for SOL token rewards that are given to stakers and validators contributing to the upkeep of consensus of the Solana blockchain.
Why is Solana on the rise?
SOL has been on the rise most notably during all of 2021, thanks to the growth of crypto and DeFi as a whole, which led to large rises in Ethereum congestion and gas fees. This made many market participants seek out alternative Layer-1 and Layer-2 blockchains, of which Solana has been a strong contender thanks to its technological innovations which allow for high throughput and low transaction fees.
Is Solana completely anonymous?
No, Solana is not fully anonymous to use, since it is a public blockchain. It is, however, pseudonymous, but depending from where users obtain their SOL tokens, blockchain forensics can track the user’s identity.
Is Solana considered a currency?
Yes, the SOL token is considered a currency that is used on the Solana network for the purpose of payments for transactions. It can be bought or sold for fiat or other cryptocurrencies and its value may fluctuate.
Is it possible to generate profits with Solana?
Yes, assuming the SOL token increases in price over time with the continued development of the Solana blockchain, and given its partnerships and funding initiatives continue to expand, plus as more users and developers are onboarded onto the network, the SOL token should do very well in turn.
All of this combined will lead to greater user adoption and transaction activity on Solana, which creates higher demand for the SOL token itself. Solana has plans to onboard a billion users and is creating the infrastructure to be a top contender in doing so.
All investors must do their own research, due diligence, and ensure that they are comfortable with the amount of risk they are taking. All cryptocurrencies are extremely volatile and risky. Always proceed with caution.
Why do people believe in Solana?
Many analysts and investors believe that Solana is a strong contender for a Layer-1 blockchain that compares competitively to Ethereum thanks to its technological advantages, unique consensus mechanism, its Wormhole bridge that brings liquidity over from other blockchains, its extremely strong backers and crypto-native partners, and the leadership of the Solana Foundation.
Is Solana supply limited?
No, the SOL token supply is not capped or limited. The total supply of SOL tokens should reach 550M after 2 years of the network being live, and 700M SOL during the 8th year.
How does the Solana Foundation or team investigate suspicious or fraudulent transactions?
It is not clear how the Solana Foundation or team investigates suspicious transactions at this time, but given that they have strong partners with crypto-native market makers and top firms like FTX, fraudulent or suspicious activity can be noted either on the Solana Protocol blockchain explorer, https://solscan.io/, since all activity is performed on a public ledger. Blockchain forensics agencies such as Chainanalysis can use methods to surveil public blockchains such as Solana.
DISCLAIMER
This is not financial advice, only observations and speculation. All investors should do their own research and due diligence. The crypto markets are extremely volatile and losing your investment is possible.
