- Solana has the potential to become the Visa of the digital asset ecosystem, says BoA.
- The BoA analyst explains that Solana’s ease of use and low cost means it is optimized for micro payments, gaming, DeFi and NFTs.
“Solana has the potential to become the Visa of the digital asset ecosystem,” says Alkesh Shah, global crypto and digital asset analyst at Bank of America. Solana could take market share away from Ethereum, he cited.
Solana’s network consists of more than 400 decentralized apps, which include anything from peer-to-peer exchanges to NFT markets. Solana is the fifth-largest cryptocurrency by market cap.
Regardless of the fact that Ethereum had a strong year in 2021, it was eclipsed by Solana. Given the fact that Ethereum is more decentralized, Shah believes that it is not scalable enough, causing transaction costs to rise. As a result, the analyst considers scalability to be a justifiable trade-off.
The analyst remarked that “Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has trade-offs, illustrated by several network performance issues since inception” referring to a September network outage and several smaller issues. Solana also came to a halt in December for five hours.
Visa now processes 1,700 transactions per second (TPS), however, the network has a theoretical capacity of at least 24,000 TPS. On mainnet, Ethereum can manage roughly 12 TPS (more on tier twos), whereas Solana has a theoretical capacity of 65,000 TPS.
The BoA analyst explains that Solana’s ease of use and low cost means it is optimized for micro payments, gaming, DeFi, and NFTs. Ethereum, meanwhile, could become the blockchain for “high-value transactions and identity, storage and supply chain use cases,” he wrote.
Solana has achieved “substantial adoption” since its inception in March 2020, with more than 50 billion finalized transactions and more than 5.7 million NFTs created, according to the note. The price of sol has risen more than 4,000 percent in the last year as a result of all of this increase.
Shah also mentioned Avalanche and said that it could be a medium ground of both an updated Ethereum network and Solana. He said that Ethereum-level security and Solana-level speed may make it the greatest blockchain for decentralized financing and businesses.