Solana ($SOL): 3 ‘Critical Events’ That Could ‘Bring Significant Activity and Value’

A recent comprehensive research report looked at the Solana platform and identified three “critical events on the horizon” that could collectively “serve as the tailwind for cutting through challenging macro forces and bring significant activity and value to the network.”

On July 24, Messari research analyst James Trautman published an impressive highly comprehensive research report (titled “State of Solana Q2 2022”) that took a close look at Solana.

Trautman started with a quick overview of Solana:

Solana is a public, open-source blockchain that aims to deliver scalability and support smart contracts without sacrificing decentralization and security. It accomplishes this through a novel timestamp mechanism called Proof-of-History (PoH). Using PoH, the network can order and batch transactions before they’re processed through a separate Proof-of-Stake (PoS) consensus. Additional design goals include sub-second settlement times, low transaction costs, and support for all LLVM-compatible smart contract languages, including Rust, C, and C++.

He then looked back at “developments and events from the prior quarter,” analyzed the Solana network’s “most recent quarterly performance,” and talked about development work currently going that could in the future deliver growth for the network. 

According to Trautman, this was the Q2 2022 narrative:

Following unprecedented growth in 2021, the Solana network experienced continued growth in some areas but challenges in others during Q1 2022. Volatility was prevalent across metrics, but stabilization of network usage, financial performance, and network infrastructure occurred by the end of the first quarter. A growing NFT marketplace reached billion-dollar sales volumes, TVL diversified across an increasing number of DeFi applications, and strategies to launch applications across several new sectors were underway as the quarter came to a close. At the same time, growing pains persisted with periods of unstable network conditions, and as a result, the outlook for Q2 2022 was unclear.

Ultimately, chaos arrived at the onset of Q2 as Layer-1 network activity declined dramatically across the space. Macro forces such as hawkish monetary policy and the $60 billion collapse of terraUSD (UST) and LUNA set the market into a tailspin. Solana, like most networks, felt the macroeconomic environment as we saw declines in financial and network usage metrics.

However, the bear market has not stopped Solana from implementing solutions to improve network stability and expand its ecosystem. In Q2, core developers focused on building out QUIC and a novel fee prioritization mechanism to improve the network’s reliability and reduce downtime during periods of congestion. Further, strategies to expand ecosystem adoption became more evident with the continued expansion of NFT marketplaces, progress towards EVM compatibility, advancement of Solana Pay, and the roll-out of Solana Mobile.

Although the entire report is full of valuable insights, the section $SOL holders might find the most bullish is the one titled “The Road Ahead”, where Trautman says:

Implementations of v1.10 will continue to roll out slowly. Further, the fee prioritization mechanism is under active development and is targeted for inclusion in the upcoming v1.11 series. Expect to see continued improvement in network performance as these upgrades are implemented.

Another significant development on the horizon is Neon. While the project has released Neon Alpha (the development network), it has yet to go live on mainnet. The project has highlighted that the EVM will be able to process 4,500 TPS. Once live, we could see significant growth similar to how we saw other EVM Layer-1s acquire developers, users, and considerable market share in the past. Solana’s Neon EVM is expected to launch on mainnet soon.

Lastly, the open sourcing of the Solana Mobile Stack (SMS) for Android will be a significant development over the months ahead. The SMS will enable native Android Web3 applications on Solana. In addition, Saga, the first Solana Mobile Android phone, will begin shipping with the SMS by Q1 2023. These developments are aimed at bridging smartphones and unique functionality and features that will tightly integrate with the Solana blockchain.

The Messari analyst ended his report by saying:

Ultimately, the Solana ecosystem and community will press on as it has since its beginning. Investment strategies and incentive programs are expected to drive growth while the core platform continues to be upgraded. The releases of v1.10 and 1.11, EVM compatibility, and Solana Mobile Stack are critical events on the horizon. Collectively, they may serve as the tailwind for cutting through challenging macro forces and bring significant activity and value to the network.

Image Credit

Featured Image by Larisa-K via Pixabay

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