Article source: Felix
Author: Duo Nine, Crypto Analyst
Compiled by: Felix, PANews
Note from PANews: This article represents the author's views and does not constitute investment advice, DYOR.
Solana has captured the retail market in a way that other chains cannot match by doing one thing right.
Competitors like Ethereum have failed in this regard and paid a heavy price. BNB Chain failed. Tron tried but failed.
These competing L1 chains have failed, while Solana has succeeded, which is why SOL deserves respect.
How did Solana achieve this?
Solana VCs have tapped into market greed in ways that other L1s cannot match.
Tron's transaction costs are also low, as are those of BNB Chain. Solana does not have an advantage in this regard. However, both competing chains are focused on the wrong priorities.
Binance focuses on their CEX, generating airdrops for users from newly listed tokens on Binance. Users must stake BNB for this. This method helps keep BNB's price high.
BNB also hit an all-time high in this cycle, but it did not rise 28 times like Solana (compared to the low in 2022).
Official data from Tether shows that there are 60.2 billion USDT on the Tron network, close to half of the total existing USDT supply of 130.7 billion, with 66.3 billion USDT on the Ethereum chain, and only 860 million USDT on the Solana network.
USDT on ETH is mainly used for DeFi, while USDT on Tron is used for transfers and payments. Tron and Justin Sun tried to create memes and draw retail investors to their chain, but were unsuccessful. They entered the game too late, and the TRX price failed to rise 28 times this cycle.
As for Ethereum, it has completely detached from market reality. Vitalik boasts on forums about a 5-year roadmap.
However, retail investors' attention spans are 30 seconds, which is the time needed for Solana memes to grow 10 times on pump.fun.
What makes Solana a winner?
In addition to low transaction costs and a 28-fold increase since 2022 (which is important for retail investors), Solana has done one more important thing.
They created applications and ecosystems to satisfy greedy desires through memes. Solana VCs invested heavily and also subsidized network costs, actively creating FOMO through memes.
They also focus on creating applications and wallets that retail investors can easily understand. Retail investors do not care about infrastructure (unlike Ethereum developers); they care about rising prices.
Solana has achieved this and allowed retail investors to gamble like Degens. Literally, Solana is a meme machine, the king of memes. Their ecosystem constantly produces new memes, just like Tron handles USDT transactions.
Other L1s do not have this advantage, and retail investors love memes.
This also produced unexpected results.
If you talk about cryptocurrency with friends, Solana will be the first and most discussed altcoin. In this cycle, the question you get from newcomers is 'How do I buy Solana?' rather than 'How do I buy Ethereum/BNB/TRX?'.
This should be underestimated. New funds are flowing into Solana, and the price of SOL reflects this.
Even Solana's VCs were surprised by this success. They did well. And they also plan to cash out in a big way.
In early 2025, tens of millions of SOL will be unlocked and sold into the market. Retail investors might go crazy and invest in SOL due to FOMO. A meme token basically costs hundreds of dollars.
In fact, the Solana token is the ultimate meme. Retail investors will actually think, 'I'll sell this meme coin and put the profits into SOL.'
They do not know that Solana is also a meme.
This idea will only drive up Solana's price now. As long as retail investors think Solana is 'safe' or a 'blue chip,' the game will continue until the music stops.
Whenever people bet on memes in SOL and realize 'profits' by buying SOL, the real winners are the VCs selling SOL.
Solana does not have actual use cases for payments or remittances like Tron, nor does it have DeFi like Ethereum. It has memes. Solana is very good at this and performs well in bull markets.
You can gamble on Solana, but ultimately you need to exit; do not put your money into SOL or any tokens on the Solana network. It is a centralized database, not a decentralized currency like Bitcoin.
Perhaps some would argue that Solana is filled with fake users, and that is true.
But that doesn't stop real retail investors from being lured into its ecosystem.
Once they join, the bots created by Solana start to work. On pump.fun alone, hundreds of bots immediately rush to buy any newly created meme tokens.
It's a flywheel, incentivizing users to keep spending in hopes that some token of theirs will explode.
Some will, but most won't. It works until retail investors exit during a bear market and liquidity dries up.
By then, all plans would be completed, and VCs had cashed out hundreds of millions or even billions of dollars.
You see, retail investors only need to spend $100 to buy some meme tokens to become millionaires. This story will satisfy the FOMO needs of thousands of new users.
Then this cycle will repeat. Round and round. Solana has captured this cycle well. And there have been other similar cycles in the past crypto markets.
Related reading: How do VCs view the current Memecoin frenzy?
