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Solana has exceeded all expectations following the FTX black swan event, which saw the price of its native token drop to single digits. Now, it has emerged as a significant player in the cryptocurrency space. With VanEck’s recent filing for a Solana exchange-traded fund, Solana is making strides towards mainstream recognition.

What Makes Solana Stand Out?

Pantera Capital has described Solana as the “macOS of blockchains” due to its superior user experience. Solana is designed to be user-friendly, often abstracting away its on-chain features to meet users halfway.

Solana’s Monolithic Blockchain Architecture

Unlike modular blockchains like Ethereum and Cosmos, Solana’s monolithic architecture allows for vertical integration. This design optimizes every blockchain component, resulting in a seamless user experience similar to Apple’s operating systems.

This architecture enables Solana to handle high throughput and low transaction fees, crucial for decentralized finance applications and decentralized physical infrastructure networks (DePINs). Thanks to its optimized stack, Solana attracts both developers and users, contributing to a surge in retail activity and decentralized exchange (DEX) volume on the network. This has led to significant growth in active users and transaction volume, positioning Solana as a leading blockchain.

Growing On-Chain Activity

Solana’s growth is evident from its increase in unique active addresses, which have risen from 14,000 in October 2020 to nearly 1.34 million today. Priority fees have also jumped from under $100,000 per month in mid-2023 to over $60 million in March 2024. The share of DEX volume on Solana has increased significantly, from 0% in early 2021 to over 24% by May 2024, with 85% of all new tokens on DEXs based on Solana as of May 2024.

Solana has become a popular choice for creating new tokens and meme coins. The ease of use, combined with Solana’s speed and low transaction fees, has made it the go-to platform for casual traders. The rise in popularity of Telegram trading bots has also contributed to the on-chain explosion on Solana. For example, community-driven meme tokens like Dogwifhat (WIF) have reached billion-dollar market caps.

The World’s First Mainstream Blockchain

It would be short-sighted to attribute all of Solana’s growth to the money markets. Platforms like MarginFi and Jupiter are pushing the envelope for simple decentralized finance products that don’t require users to have deep pockets. However, Solana has proven itself capable of much more.

Pantera Capital recently concluded a raise for a new fund aimed at purchasing up to $250 million worth of SOL tokens. This came after a significant investment decision in April by Pantera Capital and Galaxy Trading to acquire around 30 million locked SOL tokens valued at $1.9 billion.

Despite the price of SOL rising over 723% in the past year, Solana offers many opportunities for venture capitalists beyond token speculation. Crypto-adjacent technologies and digital systems integrating web3 functionalities are becoming more accessible to the average user. Solana is already one of the most widely used blockchain networks and is on track to bring crypto products to mainstream consumers.

Why Venture Capital is Bullish on Solana

Solana aims to provide refined web3 use cases that could change how we communicate, transact, and create. From real estate to digital networks, and AI systems to identity verification services, numerous projects are being built on Solana.

Privasea, for example, is a technology that attests to human liveness to protect the digital presence of real people from bots and AI impersonations. With digital fraud becoming more rampant, solutions like Privasea are addressing a crucial aspect of daily life.

Another example is Grass, a layer built on Solana designed to give users control over data acquisition for AI. Grass currently has over two million users and boasts the ability to fine-tune specific AI models and inform real-time inference. It is projected that, by the time Grass hits 25 million users, it will be capable of crawling enough data to train ChatGPT from scratch on a weekly basis.

Critics often point to Solana’s history of network outages as a bearish factor. However, a major upgrade called Firedancer is slated to go live next year, with lite versions already being rolled out to boost the network’s resilience against congestion.

Circumstances are aligning to make Solana the home of a new generation of blockchain users, opening up untapped markets and revitalizing existing ones. This is why venture capitalists are making strategic long-term investments in Solana.

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