What Are The Pros And Cons Of Investing In Solana In 2022

What Are The Pros And Cons Of Investing In Solana In 2022

Investment
October 24, 2022 by Diana Ambolis
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Cryptocurrency aficionados regard investing in Solana as Ethereum’s main competitor due to its quick transactions and minimal fees. SOL can support 50,000 TPS, whereas ETH can only handle 14 TPS at the moment. Due to the high gas costs, Ethereum is switching from a proof-of-work to a proof-of-stake consensus process. However, SOL still prevails in
What Are The Pros And Cons Of Investing In Solana In 2022

Cryptocurrency aficionados regard investing in Solana as Ethereum’s main competitor due to its quick transactions and minimal fees. SOL can support 50,000 TPS, whereas ETH can only handle 14 TPS at the moment. Due to the high gas costs, Ethereum is switching from a proof-of-work to a proof-of-stake consensus process. However, SOL still prevails in terms of transaction prices and speeds.

Pros Of Investing in Solana

The third-largest futures market is Solana:

The most crucial statistic in derivatives contracts is open futures interest, and Solana presently holds the third-largest position. Despite its steep decline in price value in early November, its public futures interest maintained its prior levels. No matter its capacity for trading at the moment, the aggregate gets the total number of contracts stored on its network by market players.

Smart contracts and NFTs:

The NFT market has exploded over the past year. The non-fungible tokens became a fast-growing business possibility, followed by massive sales run by prominent digital artists. Taking advantage of this growing business, Solana entered the market immediately to provide the NFT option. Solana is a member of the network’s NFT market, and Solanart is expanding its market share. The platform’s low costs and quick transactions are two of its most significant benefits for NFT enthusiasts.

In terms of TVL, users, and derivatives, Solana dominates the market: 

Undoubtedly, Solana’s on-chain data and derivatives market has seen tremendous activity. Over the past six months, the network’s TVL has climbed by more than 15%. The distance between TVL, active users, and the derivatives market appears to be reducing swiftly.

The ecosystem of SOL has significant institutional appeal because Solana’s market valuation is more than the combined value of Avalanche and Terra. There is compelling evidence that the investment community for SOL is expanding in 2021, and with more investor acceptance also comes increased institutional adoption.

Also Read: Top 4 Blockchain Gaming Projects On Solana

Cons Of Investing in Solana

Some cryptocurrency aficionados think there may not be many drawbacks to buying SOL, yet this aspect of the coin is seen as its main drawback. Solana is not sufficiently decentralized. The Solana network now only has 1,000 validators compared to the approximately 200,000 validators on the ETH network. The web is more secure the more validators there are.

Less projects: The Ethereum network contains more projects than Solana due to the first-mover advantage. According to SOL, the network is home to roughly 350 projects, including decentralized finance, NFT initiatives, and gaming applications. More new ventures might use SOL rather than ETH if more investors become aware of the cryptocurrency’s quick transactions and minimal costs.

Inflation: Using cryptocurrencies as a hedge against inflation was one of the numerous reasons why they gained popularity in 2020. Most digital currencies have a hard limit on the total number of existing coins. But Solana doesn’t have a consistent supply of money. The inflation rate will drop by 15% until it reaches 1.5% when it will stop falling further. The developers started boosting the annual supply of SOL tokens by 8%.

Unstable network: The investment scene in Solana is still in its infancy. When the Solana Foundation stated that its network was experiencing some instability, the cryptocurrency’s reputation suffered. Investors might not be easily persuaded to purchase SOL over Ether because it has a less established track record than Ethereum. This scam distances SOL from its most significant competitors since dependability is crucial for cryptocurrency investors.

Phases of testing for Solana: Although Solana has enormous ambitions for the future, many of them are currently in the beta stage. It won’t be feasible to predict how effective the coin might be unless the corporation carries out those plans.

An interesting cryptocurrency is Solana. It stands out from the other cryptocurrencies on the market by demonstrating steady growth and promise. However, investors assess how much they are willing to risk before trying their luck with cryptocurrency investing.