The popularity of Solana has made it the 5th largest cryptocurrency worldwide. Today the growing community of traders and investors are excited to explore Solana technology since it has outperformed market leaders like Ethereum and Bitcoin. Although crypto is volatile in nature and is a relatively new concept in the market, investment in Solana has gained great momentum. Many crypto investors and traders are not sure about the winning streak of Solana and want to know whether they should invest in it. This article lists the pros and cons of Solana so that investors can decide whether Solana can be a good investment for them in the year 2023 or not.
Pros
- Low fees and fast transaction
Crypto enthusiasts consider Solana to be the biggest rival to Ethereum. While the Ethereum platform can process only 14 transactions per second, Solana has outperformed Ethereum as it supports around 50,000 TPS per day. This is because the Ethereum blockchain works on a Proof Of Work consensus algorithm, whereas Sol works on a Proof Of History and Proof Of Stake consensus mechanism. Therefore, the gas fees of Solana are comparatively less expensive than Ethereum. Solana gets a competitive edge due to its low cost and high transaction speed.
- Smart contracts and NFTS.
The NFT industry is gaining great momentum over the course of a few years. The industry of non-fungible tokens is constantly rising and is followed by high sales hosted by versatile digital artists. Solana is leveraging the NFT industry with Solanart, an NFT marketplace that runs on the Solana network. NFT fanatics gain a great advantage from the Solana platform because of its low fees and high transaction speed.
- Solana is dominating the crypto market in terms of users, derivatives, and TVL
Solana derivatives and the on-chain data market have witnessed tremendous activity. Solana’s TVL has jumped by more than 15% during the last six months. The gap between active users, TVL, derivatives market also seems to be reducing swiftly. Solana’s ecosystem has great institutional appeal since the market evolution of the Solana network is higher than the combined value of Terra and Avalanche.
Cons
- Solana is not fully decentralized
According to a few crypto enthusiasts, there are certain disadvantages to Sol investment, and the biggest con is that the Solana network is not fully decentralized in nature. While the Ethereum network has around 2,00,000 investors, the Solana network has only 1000 validators. More number of validators makes a network more secure.
- Fewer projects:
Solana has fewer projects compared to the Ethereum network. As per SOL claims, there are around 350 projects running on the Solana platform, including NFT projects, gaming apps, and decentralized finance. More investors are yet to become aware of Sol’s fast transaction and low fee advantages so that more businesses can build projects based on Solana in the future. With more crypto education, investors may choose Sol over ETH.
- Unstable network:
The investor community of the Solana network is still in its infancy stage. This network has a short track record compared to other popular cryptocurrencies like Ethereum. This is why investors are not fully convinced about choosing Sol over ETH. The reputation of this crypto took a hit after a tweet made by the Solana foundation about the instability of the network. As reliability and security is the key for crypto enthusiasts and investors, the unstable nature of the Solana network is giving it a big setback.