This year, the price of Solana’s sol token has skyrocketed, leaving many other cryptocurrencies in the dust as this innovative blockchain project gains traction.
On Messari, the digital token reached an all-time high of $214.36 last night.
It was up more than 13,200% from its price of $1.61 on January 1 at this point, according to Messari data.
The digital currency later retreated and was trading at $192.72 at the time of writing, still up more than 11,800 percent year to date.
The project, whose innovative technology has gained widespread attention, claims to have created the world’s fastest blockchain.
The network could theoretically process 710,000 transactions per second (TPS) using a 1 gigabit per second network connection, according to the Solana white paper.
Anatoly Yakovenko, founder and CEO of Solana, provided a more specific example of blockchain bandwidth in a blog post.
“When running with GPUs, a network of 200 physically distinct nodes supports a sustained throughput of more than 50,000 transactions per second on current iterations of the Solana Testnet,” he said.
“Achieving as such necessitates the implementation of several optimizations and new technologies, resulting in a breakthrough in network capacity that heralds a new phase in blockchain development.”
Solana employs a proof-of-history consensus algorithm, which “creates a historical record that proves that an event occurred at a specific point in time.”
Solana has other advantages besides having promising technology that could provide very high transaction capacity.
According to the project’s website, the average transaction fee is $0.00025, which is significantly less than the cost of the average Ethereum transaction at the time of writing.
Solana Labs, the company behind the network’s software, raised over $300 million in a token sale led by Andreessen Horowitz and Polychain Capital.
The funding round was also attended by Alameda Research, a venture capital firm founded by cryptocurrency billionaire Sam Bankman-Fried.
In light of Solana’s recent visibility, as well as the sharp gains enjoyed by sol, several analysts provided some insight into the network, as well as what aided in driving its tokens higher.
“Solana is a legitimate competitor to Ethereum, with lightning fast transactions at a fraction of the price,” said Scott Melker, the host of The Wolf Of All Streets Podcast and a crypto investor and analyst.
“The rapid rise in value is largely due to crypto gaming and successful NFT launches,” he explained.
“For years, developers and projects have been building on Solana, which has resulted in an explosion of price and adoption.”
Loan Venkatapen, cofounder and managing director of Blocklabs Capital Management, also spoke up.
“The Solana blockchain is an ultra high performance, low latency blockchain that is fully smart contract compatible,” he explained.
“Historically, there has been a trade-off in blockchain technologies between security, decentralization, and speed. Solana is the first serious attempt to resolve this quandary.”
“By incorporating a proof-of-history mechanism into the standard proof-of-stake consensus, Solana has built a network natively capable of processing up to 65K TPS with an average transaction cost of less than one cent, whereas most other blockchains are still working on Ethereum-based layer 2 solutions or side chains,” Venkatapen explained.
“Solana is a unique blockchain that provides below-second block finality,” said digital currency investor Marius Rupsys.
“This opens up possibilities for use cases that were not previously possible,” he added.
“Games, for example, can run on this blockchain. The most notable structure built on top of Solana is Star Atlas.”
“Furthermore, NFTs are a really hot market right now,” Rupsys said, referring to the recent announcement by crypto derivatives exchange FTX that it had launched a platform for creating NFTs that will exist cross-chain on both Solana and Ethereum.
He succinctly stated that “there are many use cases for this blockchain,” which has a “large community” and “influential investors.”