Bank of America (BofA) digital asset strategist Alkesh Shah recently released a research note, in which he identified the Solana blockchain ecosystem's potential to become the "Visa of crypto" due to its immense capacity for scalability, low fees, and ease of use.
Solana is currently the fifth largest cryptocurrency in terms of market capitalization. It ranks behind the Tether USDT stablecoin with roughly $47 billion in market cap over an average daily trading volume of $2.2 billion. According to Shah, Solana's consumer-focused design is its key differentiator from other cryptocurrency projects and blockchains.
"Its ability to provide high throughput, low cost, and ease of use creates a blockchain optimized for consumer use cases like micropayments, DeFi, NFTs, decentralized networks (Web3) and gaming." Shah stated. "These innovations allow for the processing of an industry-leading ~65,000 transactions per second with average transaction fees of $0.00025, while remaining relatively decentralized and secure," he adds.
The digital strategy researcher also noted that Solana is poised to cut up a portion of Ethereum's market share, while Ethereum itself would reposition as the blockchain of choice for “high-value transaction and identity, storage and supply chain" use cases.
The comparison to Visa is not without merit. Visa can currently process an average of 1,700 transactions per second (TPS), with a theoretical limit of 24,000 TPS. Solana, in comparison, has a theoretical limit of 50,000 TPS, a little more than twice that of Visa's. By comparison, Ethereum only has 12 TPS for its mainnet network, excluding transactions processed via Layer 2 solutions.
“Ethereum prioritizes decentralization and security, but at the expense of scalability, which has led to periods of network congestion and transaction fees that are occasionally larger than the value of the transaction being sent," Shah stated, while also admitting that Solana also has its downsides, saying: "Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has tradeoffs, illustrated by several network performance issues since inception."
Due to the surge in interest in Solana, it has suffered several periods of bogged down network performance over the past few months. Recently, Binance issued a notice on Solana withdrawal issues, acknowledging the issue as an inherent part of Solana's network design. Binance recently listed Solana's native token, $SOL, as collateral asset under its Binance Loans program. CryptoDaily has also covered news of Solana breaking down due to what appears as a DDoS attack earlier this month.
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