Solana’s Network Scalability and Price Trends

Solana’s Approach to Handling Network Congestion

Addressing the Scalability Concerns

Solana’s co-founder recently discussed the scalability differences between Solana and Ethereum, emphasizing how price discovery is impacted when global resources become saturated within the Solana network. While Solana can handle congestion, increased usage may lead to congestion issues as hardware needs to scale up to meet demand. It is crucial for the software to allow validators to add more hardware to address new demands efficiently.

Challenges Faced by Solana

Network Downtimes and Bugs

Last year, Solana experienced several downtimes due to various factors, hindering price development despite institutional adoption. An outage on Feb 6 caused by a bug that led to a finite loop error highlighted the network’s vulnerabilities.

Solana’s Market Performance

Smart Contracts and DeFi Dominance

Solana has gained popularity as an “ETH killer” among the crypto community. Despite institutional adoption and growing buzz, Solana’s price growth has not matched Ethereum’s. The network’s smart contracts continue to outperform competitors, while DeFi platforms on Ethereum have seen increased activity following the approval of crypto ETFs.

Institutional Investor Interest

Traditional firms applying for spot Solana ETFs and the influx of institutional investors show growing interest in the network. However, the anticipation of a spot ETF launch has not directly affected the asset’s price, indicating a cautious approach among holders.