Solana’s Growing Pains – Decipher

Solana's Growing Pains - Decipher

Solana (SOL) jumped 350% between August 7 and September 7. In the past two weeks alone, the native token of hot alternative Ethereum has toppled Dogecoin and then XRP to become the #6 cryptocurrency by market capitalization.

But on Tuesday, the Solana network went down. The 5 p.m. blackout caused SOL to drop 16%.

Anatoly Yakovenko, founder of Solana tweeted that the outage was caused by bots “flooding the network” during an IDO (initial DEX offering) for a token called Grape on Raydium, a decentralized exchange built atop the Solana network. In response to a Solana user asking, “Please tell Raydium not to use FCFS [first come, first serve] IoT plus”, Yakovenko shrugged: “No, just need to fix bugs. Part of life.” Later that day, he figured it was better for the outage to happen now than later, when Solana has a billion users.

It is an admirable optimism. But whether Solana ever hits a billion users is a big question mark. In the land of cryptocurrencies these days, new projects pop up practically overnight, the token catches fire, and what happens next varies wildly: some fade, others abruptly die out due to coercive action or hacking, and some prove their endurance over time. .

Yakovenkoa former Qualcomm and Dropbox developer, released the Solana white paper in 2017, and the smart contract network launched its mainnet in 2020. It’s not the only Ethereum challenger – Cardano (ADA), Polkadot (DOT), Stellar (XLM), NEO and Dfinity (ICP) are among others. But some of those names have already had their moment in the sun and fallen back to Earth, while Solana is currently enjoying an extended “Solana summer” for a number of reasons.

First, and most important: it’s lightning fast and relatively easy to use. Solana processes 65,000 transactions per second (TPS). Ethereum only manages 30, and Bitcoin’s TPS is currently… less than 6. In other words, Solana is what it claims to be: faster than Ethereum, for now. As blockchains become more popular, they tend to get slower.

Solana’s tools are also remarkably easy to use, which you find out right away when you try them. In my attempt to buy an NFT on Solana (too expensive so I didn’t buy), I had to set up a Phantom Wallet (read our lucid how-to guide) and, I’m sorry to tell the Ethereum Crowd , it was much smoother than starting with MetaMask. It was downright fun. crypto blogger Packy McCormick had a similar experience last month when he tried Solana“I have to say…it’s really quickly and really cheap. You don’t have to think twice about doing anything because it moves so fast and costs so little. That’s the point. It’s like using the Internet.”

So that’s the technical side. On the buzz side, Solana has also had the backing (and frequent pumping) of FTX CEO Sam Bankman-Fried. In January, SBF offered a trader who was bearish on Solana to buy back all of his SOL at $3 per token (then “fuck you”). The trader did not accept it, and now SOL is at $164. And then there are the celebrity mentions of names like Steve Harvey and Jason Derulo.

But the celebrity factor can also be a sign of fleeting hype. It’s the catch Nick Tomainoone of the first employees of Coinbase whose venture capital firm 1 confirmation was an early investor in OpenSea and SuperRare, had on Solana when I asked him on Friday.

“Where I would be a little more skeptical of things like Solana is that I haven’t really seen anything new that really moves the space forward,” Tomaino says. “If you look at Solana right now and the NFTs on Solana, you have SolPunks or whatever, you have Sol Apes [Degenerate Apes], all these variations of things that are on Ethereum. And that’s great, because it brings in new people, but those things can be fleeting… When you see so much hype around something short-term, and you don’t see any real innovation in it, it can be a good time be a little skeptical.”

No real innovation? Anatoly Yakovenko and SOL bag holders would disagree. For now, Ethereum wears the DeFi crown despite its perceived flaws (those gas costs!), and how a challenger like Solana withstands growing pains like this breakdown will determine its resilience.

This is Roberts on Crypto, a weekend column from Decrypt Editor-in-Chief Daniel Roberts and Decrypt Editor-in-Chief Jeff John Roberts. Sign up for the Decrypt Debrief email newsletter to receive it in your inbox in the future. And read last weekend’s column: Under fire from the SEC, crypto companies are choosing to die hard.

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