{"id":2646,"date":"2023-11-06T21:31:53","date_gmt":"2023-11-06T21:31:53","guid":{"rendered":"https:\/\/solanacrypto.news\/2023\/11\/06\/the-death-and-rebirth-of-solana-sol-usd\/"},"modified":"2023-11-06T21:31:53","modified_gmt":"2023-11-06T21:31:53","slug":"the-death-and-rebirth-of-solana-sol-usd","status":"publish","type":"post","link":"https:\/\/solanacrypto.news\/2023\/11\/06\/the-death-and-rebirth-of-solana-sol-usd\/","title":{"rendered":"The Death And Rebirth Of Solana (SOL-USD)"},"content":{"rendered":"
\n

<\/p>\n

\"\"<\/div>\n


\n <\/p>\n

<\/p>\n

\"Solana<\/picture>
\n

Dennis Diatel Photography<\/p>\n<\/figcaption><\/figure>\n

Dennis Diatel Photography
Though Solana (SOL-USD<\/a>) is named after a beach, life at SOL has been ANYTHING but a beach. Like all projects, Solana suffered from the 5\/2022 TerraUSD stablecoin crash and the associated decline in the Terra (LUNA-USD<\/a>) ecosystem. However, the hit to Solana during the 11\/2022 FTX (<\/span>FTT-USD<\/a>) blowup was considerably worse than its peers. Below I highlight the numerous ways Solana was uniquely affected by the FTX event and then show how the Solana ecosystem has pivoted away from Defi towards NFTs and the consumer market. This pivot is being aided by Solana\u2019s innovate technologies, several of which will go live in 2024. Before proceeding, I give a summary of my Ratings Scorecard for Solana as I see a dire need for a holistic fundamental analysis that\u2019s currently not being utilized.<\/span>
The soul of Solana is Anatoly \u201cToly\u201d Yakovenko, who co-created the project while working at Qualcomm. Toly was trading on the side and figured there could be a better way of trading quicker and on a level playing field with professionals. So in 2017, Toly organized a group of Qualcomm colleagues and friends to find a better solution (Whitepaper<\/a>). Solana is a monolithic, Beta-staged, non-EVM designed L1, third-generation, smart-contract protocol developed to enhance network scalability and performance through its novel Proof-of-History (PoH) technology. Yes, that\u2019s a mouthful!
Below I highlight the key technologies that will power the project into 2024 and help mitigate regulatory risks.<\/p>\n

\"Speed<\/a><\/span>
\n

Pontem Network<\/p>\n<\/figcaption><\/figure>\n

Pontem Network<\/p>\n

<\/p>\n

<\/p>\n

\"Layer<\/a><\/span>
\n

Solana Foundation<\/p>\n<\/figcaption><\/figure>\n

\"State<\/a><\/span>
\n

Messari<\/p>\n<\/figcaption><\/figure>\n

Solana Foundation
Messari
I developed a scoring system that broadly rates blockchain projects. Solana is amongst the highest-rated project \u2013 factors are summarized below:<\/p>\n

\"number<\/a><\/span>
\n

Electric Capital<\/p>\n<\/figcaption><\/figure>\n

Electric Capital<\/p>\n

\"Geography\"<\/a><\/span>
\n

Solana Foundation<\/p>\n<\/figcaption><\/figure>\n

\"Cloud<\/a><\/span>
\n

Solana Foundation<\/p>\n<\/figcaption><\/figure>\n

Solana Foundation
Solana Foundation<\/p>\n

\"Inflation<\/a><\/span>
\n

InvestAnswers<\/p>\n<\/figcaption><\/figure>\n

InvestAnswers
Solana\u2019s name comes from the beach near Qualcomm\u2019s headquarters. However, life for Solana has been ANYTHING but a beach. The FTX (and Alameda hedge fund co-founded by Sam Bankman-Fried (SBF)) failure<\/a> left Solana for dead. Below I summarize the effects from the FTX fraud:<\/p>\n

\"TVL\"<\/a><\/span>
\n

DeFiLlamma<\/p>\n<\/figcaption><\/figure>\n

\"Github<\/a><\/span>
\n

Tokeninsight<\/p>\n<\/figcaption><\/figure>\n

DeFiLlamma
Tokeninsight
It\u2019s ironic that the loss of the NFT Dapps was the \u201cfinal straw\u201d that broke Solana\u2019s back, because Solana\u2019s NFT technologies have been key to its rebirth. To me, Solana\u2019s DNA always felt that it was about connecting consumers rather than the business of finance. Toly himself is a \u201csocial connector\u201d who worked at Qualcomm \u2013 a company which links people and data. As FTX was collapsing, Solana began making deals with consumer-facing Facebook\/Instagram (for NFTs<\/a>), Google Cloud (its Blockchain Node Engine will allow anyone to setup a Solana node), and Fireblocks (launched support for Solana NFTs and games). And let\u2019s not forget the dog-meme coin named BONK<\/a>, which was air-dropped into Solana on 1\/2023.
Even non-tech companies like McDonald\u2019s have tested Happy Meal NFTs<\/a> and ASICs introduced a new running shoe (X Solana UI Collection) which will give owners the chance to win a STEPN-based NFT<\/a>. Given this momentum, Solana\u2019s NFT volume-growth is greater than Defi, according to analysis by CryptoPotato<\/a>.<\/p>\n

\"NFTs\"<\/a><\/span>
\n

Messari<\/p>\n<\/figcaption><\/figure>\n

Messari
There\u2019s a saying that Web3 needs a \u201ckiller app\u201d to onboard the next one billion users. In Solana\u2019s case, I believe its \u201ckiller app\u201d isn\u2019t an app at all! While Solana\u2019s ecosystem remains mid-sized, I believe its ethos of innovation, as well as the technologies I noted above, will carry the chain to the next level.
Two recent innovations are Compressed NFTs and the Solana smartphone. Compressed NFTs (co-developed by Metaplex<\/a>) are NFTs on Solana that store their data in a Merkle tree<\/a> (think of a digital fingerprint) structure where the Merkle root is on-chain in an account and the Merkle leaves are stored in the Solana ledger (which is off-chain) rather than fully on-chain like conventional NFTs. So who cares? Well, this method allows costs to fall by magnitudes of scale, opening new use-cases for NFTs (see chart<\/em>). The use-cases are ginormous, including gaming, events, music ticketing (think Ticketmaster) metaverse, enterprise supply chains and personal identity\/records.<\/p>\n

\"Compression<\/a><\/span>
\n

Solana Foundation<\/p>\n<\/figcaption><\/figure>\n

Solana Foundation
On 4\/2023, Helium<\/a> moved from its native blockchain to Solana. Solana\u2019s technology is aptly suited for what\u2019s called \u201cDePIN\u201d \u2013 (decentralized physical infrastructure networks) such as wireless, storage and energy networks. Helium provides peer-to-peer Hotspots that creates an internet of things (IOT) and a mobile network. The project said its move was motivated by Solana\u2019s reliability, access to developers, Solana\u2019s network speed and most importantly, compression technology<\/strong> that will sharply lower Helium\u2019s network costs.
Also on 4\/2023, Render Network<\/a>, the first decentralized graphics processing unit (GPU) rendering network (Beeple uses them<\/a>), voted to migrate from the Ethereum\/Polygon platforms to Solana. Render also announced a partnership with Metaplex, so Render will be able to sharply lower costs for its graphically-intense (and real-time) renderings and utilize Solana\u2019s scalability and software developers.
On 5\/8\/23, Solana announced<\/a> that consumers will be able to order its new Solana Saga smartphone. Odds are, the Saga won\u2019t be able to compete successfully against the iPhone\/Android incumbents. However, a great deal will be learned. Saga features a Mobile Stack that integrates crypto usefulness (think payments) into the phone\u2019s hardware and software. For example, there\u2019s what\u2019s called a Seed-Vault, which stores a user\u2019s private keys in a segregated manner from the rest of the phone\u2019s data, thereby offering heightened protection to the keys. Toly jokes that it\u2019ll have 16 dapps (around the same number Apple had on its first smartphone) in its appropriately name Dapp Store. Solana will undercut Android\u2019s\/Apple\u2019s 30% fee as it will not charge ANY fee. I believe that even if the Saga gains a fraction of the smartphone TAM ($479Bn in 2023<\/a>), it\u2019ll be deemed a success given the large market opportunity. Already, orders have been steadily climbing to 10,000. (See Chart.)<\/p>\n

\"Solana<\/a><\/span>
\n

Adheeraj (Dune Analytics)<\/p>\n<\/figcaption><\/figure>\n

Adheeraj (Dune Analytics)
Changes in TVL have been behind strong moves in coin prices, especially when users are dependent on just one third-party data provider \u2013 in this case Defi Llama. For example, some TVLs soar from nothing to hundreds of millions due to incentive programs. However, those incentives tend to burn-out quickly \u2013 and how do you compare incentive vs. non-incentive (Solana) projects on an apples-to-apples basis ?
In the case of Solana, not all of its ecosystem\u2019s TVL is captured \u2013 some of this is due to the high composability of Solana. For example, the Hivemapper, Helium and Render dapps are not in Defi Llama\u2019s dropdown data for Solana. This is especially true when the project has a high proportion of NFT transactions that are participating in Defi. Kamino Finance wrote an article<\/a> highlighting this very point.
There are several ways you can value crypto projects including: number of active addresses, daily transactions, price\/book, price\/revenue and price\/TVL. However, I believe it\u2019s too early to use these metrics as crypto projects are analogous to venture capital portfolio companies which have minimal revenue-bases. As I mentioned with TVL, several of the metrics can be incorrect. Prior to FTX, I thought Solana was somewhat undervalued using price to book value. I assumed that its huge treasury was analogous to book value as projects are debt-free. But with the FTX blowup, so too has Solana\u2019s treasury.
Given Solana\u2019s high exposure to NFTs, I believe using Market Cap\/Daily Transactions (the lower the number the better) could be the best valuation strategy (see Chart below<\/em>). Using Market Cap\/Active Addresses yields similar results, with Solana being one of the most undervalued compared to its peers, at under $20,000\/address. The closest peer is Near Protocol which is double that amount.<\/p>\n

\"Market<\/a><\/span>
\n

InvestAnswers<\/p>\n<\/figcaption><\/figure>\n

InvestAnswers
I believe the cryptocurrency space is inefficient (asset prices do not accurately reflect fundamentals). Once you\u2019ve done the hard work of finding a good project, technical analysis can be used as a timing tool. I believe that Bitcoin is overbought and that the global macro situation of tightening liquidity does not support higher prices for all crypto including Solana.
Further, increased regulatory scrutiny of Altcoins and Stablecoins may increase Bitcoin\u2019s Dominance (i.e., market share of Bitcoin vs the total crypto market) causing Altcoins to \u201cbleed\u201d against Bitcoin. See Sol\/Bitcoin Chart.<\/p>\n

\"chart\"<\/a><\/span>
\n

Trading View<\/p>\n<\/figcaption><\/figure>\n

Trading View
Ethereum\u2019s issues with speed\/scalability and long upgrade cycle, leaves the door open for new L1s like Solana to capture market share. As such, a DCA accumulation strategy would be recommended on Solana. So, if the old Facebook could \u201cmove fast and break things\u201d a reborn Solana could certainly \u201ceat glass<\/a>.\u201d Enjoy the ride!
This article was written by
Analyst\u2019s Disclosure:<\/b> I\/we have a beneficial long position in the shares of SOL-USD either through stock ownership, options, or other derivatives.<\/span> I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. <\/span>
Seeking Alpha\u2019s Disclosure:<\/strong> Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.<\/p>\n

source<\/a><\/p>\n

<\/p>\n

<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Dennis Diatel Photography Dennis Diatel PhotographyThough Solana (SOL-USD) is named after a beach, life at SOL has been ANYTHING but a beach. Like all projects, Solana suffered from the 5\/2022 TerraUSD stablecoin crash and the associated decline in the Terra (LUNA-USD) ecosystem. However, the hit to Solana during the 11\/2022 FTX (FTT-USD) blowup was considerably […]<\/p>\n","protected":false},"author":1,"featured_media":2647,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2646","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/posts\/2646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/comments?post=2646"}],"version-history":[{"count":0,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/posts\/2646\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/media\/2647"}],"wp:attachment":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/media?parent=2646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/categories?post=2646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/tags?post=2646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}