Solana has solidified its position as one of the top three cryptocurrencies. With the launch of spot ETFs for Bitcoin and Ethereum, Solana’s spot ETF is also likely to arrive in the near future, which will have a huge impact on SOL.
Solana: Synchronizing the World at the Speed of Light
Solana was founded by Anatoly Yakovenko and Raj Gokal in 2018 and launched in 2020. It is a delegated proof-of-stake (PoS) blockchain designed for high performance and mass adoption. With extremely low transaction costs, a wide range of decentralized applications, and an active user and developer community, Solana has accumulated nearly 300 billion transactions and over $4 billion in total locked value. Recently, Solana has performed well in a number of high-profile token launches, project migrations, and key innovations such as token scaling.
Solana's Technical Advantages
Proof-of-History: This mechanism provides validators with a notion of time, allowing them to generate blocks when it is their turn without requiring the network to reach consensus first, greatly improving speed and scalability.
Parallel transaction processing: Solana supports parallel transaction processing, which greatly improves throughput and fully utilizes the advantages of multi-core processors.
Optimizing decentralization: Although Solana has high hardware and bandwidth requirements, as costs come down, Solana may become the first project to truly solve the blockchain trilemma (decentralization, security, scalability).
Undervalued Cryptocurrency ETFs
With the launch of Bitcoin and Ethereum spot ETFs, the market's expectations for Solana spot ETFs are also growing. The path to launching spot digital asset ETFs in the United States is clear, but at this stage there is no other cryptocurrency futures market besides Bitcoin and Ethereum. However, changes in the political and regulatory environment may promote the launch of Solana spot ETFs.
Decentralization and Demand Analysis
Decentralization:
Nakamoto coefficient: A measure of the number of independent entities that could potentially collude to attack a network.
Staking requirements: Lower staking and hardware requirements contribute to higher decentralization.
CCData Governance Rating: Covers governance measures such as participation, transparency, and decentralization.
need:
Market indicators: high market capitalization, trading volume, and strong token performance.
Total Assets Under Management (AUM) of Existing Products: High AUM of tokens in existing investment products worldwide.
Activity indicators: Strong, active community and widespread usage.
Based on these metrics, Solana performs well in both decentralization and demand, being the only blockchain besides Ethereum to score positively in both areas.
Solana Spot ETF’s Impact on Prices
To evaluate the impact of the Solana spot ETF on the price of SOL, we refer to the impact of the spot Bitcoin ETF on Bitcoin. The approval of the spot Bitcoin ETF and the subsequent huge capital inflow were the main factors that pushed the price of Bitcoin from $27,000 to $63,000, achieving a 2.3x increase.
Growth forecasts under different scenarios
Pessimistic scenario: Solana’s global investment product AUM accounts for 2% of Bitcoin. In this scenario, Solana could grow 1.4x.
Baseline scenario: Based on the inflow data from 2021 to 2023, Solana could grow 3.4 times.
Optimistic scenario: Solana has had higher relative inflows over the past two years and could grow 8.9x.
Solana is expected to grow significantly even under the pessimistic scenario, and its potential growth is even more impressive under the baseline and optimistic scenarios. Notably, unlike Bitcoin, SOL is actively used in staking and decentralized applications, further increasing its upside potential.
in conclusion
Solana is ready for spot ETFs, and if more spot digital asset ETFs are allowed in the U.S., Solana will be one of the most likely candidates. With the launch of spot ETFs, the potential upside for SOL prices is huge, and investors should seize this opportunity.
