Currently, it sits in the third position after Ethereum and Binance Smart Chain (BSC). Recently, Solana has been hitting the cryptocurrency space with breaking news regarding several DeFi and NFT projects deployed on this blockchain.
Explaining Proof Of History
The reason why Solana has quickly climbed up the ranks of blockchains in the DeFi space is its efficient decentralisation mechanism involving proof of stake and proof of history. We are pretty well familiar now with proof of stake, but proof of history is a relatively new notion in the market.
Solana has leader nodes: they put timestamps on blocks in the form of hashes – which, in their turn, create a sequential temporality as each hash encrypts the events that happened since the previous timestamp and certifies the passing of a certain interval. After the leader node timestamps a block, it propagates the block’s hashed timestamp to the validator nodes, which can verify the hash and then add the block to the blockchain.
The intricate detail about it is that the timestamps allow the leader nodes to synchronise transactions with the validator nodes in smaller batches called entries. The validator nodes can verify the entries from different blocks and allow them to form blocks that will be confirmed with consensus later. This mechanism is a valid alternative to sharding and delegation of validator nodes that creates a throughput capacity of over 50,000 transactions per second.
The biggest project launches on Solana
The native Solana token SOL has been responding quite vividly to the growth of liquidity locked in the Solana blockchain. It has recently reached a new ATH of $219.37 as per Bitfinex. The vivacious ascent of the cryptocurrency has been accompanied by rattling project launches on Solana.
In terms of decentralised finance, a key infrastructural Solana-based element is the Serum decentralised exchange that provides liquidity pools for cross-chain asset swapping. The one big distinction with Serum is that it offers an on-chain order book based on the Solana blockchain, while still offering the liquidity pool model. This distinguishes Serum from decentralised exchanges solely based on yield curves.
Another Solana-based DEX featuring an order book is Raydium. The presence of order books on Serum and Raydium creates interoperability between both these exchanges. As of writing time, cis the second Solana DeFi protocol by value locked with $1.77 billion.
Given the increasing regulatory pressure on centralised exchanges, the Solana-based DEXes can spring to new heights really quickly as the growing demand for trading volume will need satisfying. And that will surely give the SOL coin another boost.
And Solana has also been making serious buzz with its NFTs. One of them is the FTX marketplace that combines a centralised cryptocurrency exchange, an OTC service and an NFT marketplace. As for its affiliation with Solana, some of its NFTs have been minted on the Solana blockchain and can be purchased for SOL only.
As for NFT-only projects, Atlas Start deserves a special mention. It is a space online video game with a play-to-earn mechanic. This mechanic allows the players to earn Atlas Start NFTs representing some of the game’s artifacts and skins. Its team has recently released a limited FTX and Raydium-dedicated NFT series. The Raydium NFTs will be exclusively distributed among the liquidity providers on Raydium.
What to expect of SOL in the near-to-medium term?
Given the exceptional potential of the Solana blockchain and its state-of-the-art architecture, I would expect SOL to reach $340 by the simple analysis of the Fibonacci retracement on the SOL/USD chart. Speaking of the timeframe of that event happening, I believe that March 2022 can be the month by the end of which we will have seen this happening.
This is a fairly loose forecast, but the proven potential of this blockchain and the rapid expansion of the DeFi space and the growing popularity of NFTs, I strongly believe, can play to Solana’s advantage. In that case, the growth of the price of its cryptocurrency will only be inevitable.
This article was originally posted on FX Empire