Solana: A fast growing crypto ecosystem

Solana, one of the fastest blockchains in the world today with high throughputs, is currently a top 10 cryptocurrency.

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The future of mass blockchain-based solutions is considered to be heavily dependent on progress made in decentralized applications (DApps). DeFi (Decentralized Finance) projects are in the rage right now with a massive rise in networks that support this wave. Ethereum is currently the leader in this space. Today, we track the performance of one of its biggest challengers – Solana blockchain, with over 400 projects covering DeFi, Non-fungible tokens (NFTs) and more.

Characteristics of Solana & Fundamentals

Solana is a decentralized blockchain-based computing platform that uses SOL (its native token) to pay for transactions. It is similar to Ethereum with a different technical base programming language called Rust, which developers can use to build applications. 

One of the prominent features of Solana is its scalability with the ability to process over 50,000 transactions per second (TPS), compared to 30 TPS in Ethereum. It achieves such speeds with a combination of consensus algorithms - Proof of Stake and Proof of History.

SOL, Solana’s native token, is used for paying transaction fees and staking to support the network. It is also used to perform micropayments known as lamports.

SOL, has a total supply of 506 million with about 60 per cent already in circulation. SOL currently ranks in the top 10 cryptocurrencies with a price of $150 per token, with more than $45 billion market capitalization. 

Solana’s DeFi based projects crossed the $4 billion mark last month, reaching another milestone. Ethereum is the leader in this space with more than $130 billion in assets in DeFi.

Short term technical analysis

SOL started 2021 with a price range of around $1.5 per token and thus has nearly achieved a spectacular 100x in the last 10 months. Post its all-time-high of $215 in early September, SOL declined in price on account of profit-taking and is currently in a consolidation phase.

 

Source: TradingView, Binance

The coin has formed a bull flag on the daily charts. A further consolidation to the $140 level is likely before another upwards run. Last month’s dip has also been on the back of decreasing volumes (indicated by a downward arrow on chart above) suggesting that a reversal in fortunes is imminent. Should SOL break out, it will need to wrestle with $159 as resistance, followed by $170 - where it has made multiple daily closes. 

On the downside, it is likely to find $140 as support, followed by $128 - another key daily level.

Future potential

Solana has become increasingly popular in recent months due to its extensive scalability and mining efficiency, leading many to believe it to be the future leader of the DeFi landscape. NFTs on SOL are also becoming popular for the same reason. However as Ethereum 2.0 comes through and fixes its problems with respect to speed and scalability, we expect Ethereum to wrestle back the momentum. Given that multiple DeFi ecosystems can sustainably co-exist in the future, we expect Solana blockchain to have its own set of fans. SOL, its native token, will benefit further as this fan base grows.

Crypto adoption continues to grow as Bitcoin trades at a five month high

Governments and institutions progressively see merit in blockchain based solutions.

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The cryptocurrency market shrugged off doubts and uncertainties that presented itself in September to register a 13 per cent gain this week amounting to $270 billion in market cap. Bitcoin (BTC) is currently trading near the $55,000 level, its highest since May this year. It broke several key resistances along its way this week and has registered a 14 per cent overall gain. In this article we summarize the stories that drove crypto in recent weeks.

Governments and Regulations

While China doubled down on its crackdown on cryptocurrency trading and exchanges in September, the rest of the world has been more welcoming to the new wave of technological innovation that blockchain offers. Brazil is looking to accept BTC as a legal method of payment according to the country’s Federal Deputy. It will be the second country to accept BTC after El Salvador (a Central American country) if it materializes. In Africa, the Nigerian Federal High Court has approved the rollout of a central bank digital currency (CBDC), to be called eNaira, as a legal tender in the country. According to the International Monetary Fund (IMF), more than 100 countries are exploring the launch of CBDCs in the near future. In India, RBI is said to be exploring the same.

The rise of the ETFs

There has been speculation that the US Securities and Exchange Commission (SEC) will soon approve BTC exchange-traded funds (ETFs). A ETF enables investors to gain exposure to BTC without having to hold the underlying cryptocurrency. Multiple companies have applied for approval with the US SEC for both Bitcoin and Ethereum based ETFs. These are likely to trigger wider adoption among investors who are currently skeptical of cryptocurrencies. Similar products have been approved in Canada and New Zealand this week.

Global brands and institutions are preparing for a crypto-led future

Major banks headquartered in the US are already expanding their services to allow their clients to invest in cryptocurrencies. JPMorgan observed the trends this week with a note on how institutional investors in the US are preferring BTC over gold as an inflationary hedge in recent weeks.

Visa is working on an interoperable blockchain hub that can connect to multiple blockchain networks and enable transfers of different crypto from various protocols and wallets.

Minneapolis-based US Bank has rolled out crypto custody services for those institutional investment managers with private funds seeking BTC exposure. Twitter has expanded its BTC tipping feature to all iOS users globally this week.

As we head into mid-October, we expect a few of the top companies to announce their investments in BTC as part of their quarterly updates giving more momentum to the market.

Polygon (MATIC): A blockchain with Indian founders and a great potential

Polygon is a layer 2 solution that augments Ethereum and drives its scalability.

Ethereum is a trendsetting blockchain globally and is second only to Bitcoin when it comes to popularity and market cap. Its unprecedented adoption has also resulted in some operational issues with respect to low speeds and higher transaction costs resulting in not so ideal user experience. Basically, Ethereum’s extensive network of clients clog its network and impact its scalability. An Indian-founded blockchain platform is providing a solution to these challenges via its innovative and unique layer 2 solution. Let us find out what it does and why it has a strong future potential.

Polygon (with ticker MATIC) is a complete multi-chained system, a framework as well as a protocol. It connects Ethereum-compatible blockchain networks and is built to solve the scalability issues on the current Ethereum network. It is a layer 2 solution, i.e it works on top of Ethereum’s primary blockchain. Polygon uses side chains to unclog the main platform in a smart and cost-effective manner.

Polygon (MATIC) representation, Source: Giottus
Polygon’s multi-chain network provides an infrastructure for facilitating blockchain networks that can communicate with each other outside of Ethereum’s primary chain though it retains Ethereum’s liquidity, security and interoperability.

MATIC fundamentals

MATIC, Polygon’s token, is the underlying resource behind the Polygon ecosystem. It is primarily used for staking tokens (proof-of-stake algorithm) to safeguard the Polygon network in addition to being an asset.

The MATIC token has a maximum supply of 10 billion, of which more than 67 per cent is already in circulation. It currently ranks among the top 25 cryptocurrencies in the world with a price of $1.4 per token, with more than $9 billion market capitalization.

Short term technical analysis

MATIC started 2021 with a price tag of less than $0.02 per token and hit an all-time-high of $2.45 in May giving early investors (a lot of them from India) great multiples on their investments and making its Indian founders crypto billionaires.

MATIC has traded well in technical frameworks over the past quarter, respecting both resistance and support levels. It bounced off the strong .66 - .618 fibonacci retracement levels - also called the Golden Pocket - that it formed between July to September, before rallying nearly 40% to $1.42 as of today. It has now broken through the .382 fibonacci level and seems to be headed upwards of $1.5.

Source: TradingView, Binance
With bullish momentum prominent on its charts, investors looking to enter may want to wait for a drop to the $1.34 support level. Should that level be lost, MATIC will find support at the $1.19-$1.2 levels, where its 100-day and 20-day moving averages currently reside.

In the medium-term (4-6 months), MATIC has potential to break $5 and beyond giving more cheers to the Indians who have invested in the asset.

Future potential

The potential of Polygon (MATIC) is linked to Ethereum’s strong performance. Ethereum 2.0 will mitigate some of the blockchain’s scalability issues, but Polygon will continue to be relevant as it has already demonstrated substantial success in integrating a network of companies and partners. Polygon’s future surely looks promising.