Since its initial coin offering (ICO) in March 2020, Solana (SOL) has appreciated over 300 times in value. To put this into perspective, a $500 investment in Solana during its ICO would be worth over $150,000 in August 2021. While Solana has gone up in value significantly, it’s for good reason. Solana is a smart-contract-enabled blockchain with high throughput and low fees that aims to give Ethereum a run for its money.
While the majority of gains from Solana are likely behind us, you can still find plenty of ways to make high returns through investing in Solana’s decentralized finance (DeFi) ecosystem. Similar to Ethereum, Solana is a platform for projects to build on, with decentralized exchanges (DEXs) and non-fungible token (NFT) platforms leading this innovation.
What is Solana?
At its core, Solana is a platform for decentralized applications (DApps). Developers build infrastructure on Solana’s blockchain, similar to how developers made protocols like Uniswap, Chainlink and 0x on Ethereum. However, Solana has clear benefits that may incentivize developers and users to migrate to its blockchain from Ethereum’s.
Solana uses a proof-of-history consensus model to secure its blockchain. Through using this novel consensus model, the platform can process thousands of transactions per second, whereas Ethereum can only handle around 30 transactions per second. What’s more, Solana makes it easy for developers to port over their protocols into Solana’s ecosystem, adding to the amount of infrastructure on its blockchain.
Solana vs. Ethereum
Solana’s closest competitor is Ethereum. Both blockchains host DApps and have their own unique benefits. Ethereum’s ecosystem is far more developed than Solana’s, with thousands of developers building interoperable applications where users can perform advanced financial functions without the need for an intermediary. Also, Ethereum’s blockchain offers more liquidity, which is a critical advantage when it comes to finance.
Plus, Ethereum’s blockchain is much more decentralized, making it more censorship-resistant and secure. Solana currently has about 600 validators on its network, which is about ⅙ of the validators Ethereum has. Regardless, Solana is one of the more decentralized networks within the blockchain industry.
However, Solana’s clear benefits continue to draw users to its blockchain. For one, Solana can process transactions much faster than Ethereum’s network. Transaction speed is extremely important for applications like derivative exchanges and NFT gaming. Also, it costs far less to transact on Solana, making it a better option for retail traders without large amounts of capital.
Best DeFi Projects on Solana
With such a new ecosystem of decentralized applications, Solana presents a unique opportunity for massive returns if you can find the right projects to invest in. However, with little regulation of the Solana ecosystem, you have to watch out for scam coins. Before investing in any cryptocurrency, be sure to do your own research so you can be confident that your cryptocurrency is likely to perform well over your investment horizon.
The projects deemed to be the best projects on Solana are those with a solid foundation, relatively large user base and a strong team of developers. Another important factor considered while compiling this list is how likely a project is able to compete with its Ethereum counterparts through using the benefits of Solana’s blockchain.
Serum (SRM): The leading DEX on Solana’s blockchain. The protocol has all the benefits of decentralization while keeping key features investors are used to on centralized exchanges. Whereas DEXs like Uniswap and PancakeSwap are automated market makers (AMMs) that let users swap between cryptocurrencies, Serum is a full-featured exchange with limit orders and leverage trading. Using order books on DEXs on Ethereum are infeasible, as the data needed to do so can’t be uploaded to its blockchain efficiently. You can buy Serum on the FTX exchange.
Star Atlas (ATLAS): The 1st and largest NFT gaming platform coming to Solana on August 26, 2021. The game is set in space, and users will be able to explore the virtual reality universe and own spaceships, visit planets and battle against other players. The initial sale won’t be available to U.S. investors, but the ATLAS token should be listed on DEXs, such as Serum, shortly thereafter. Solana has the potential to outcompete Ethereum in the NFT gaming space, as its blockchain can handle transactions so much quicker and at a fraction of the cost. Speed is especially important for gaming because users need quick settlements while interacting with a blockchain-based game in real time.
Raydium (RAY): The 1st automated market maker on Solana with 1st mover advantage in this space. With nearly $1 billion locked in its smart contracts, it’s one of the most widely used decentralized applications in Solana’s ecosystem. Similar to SushiSwap on Ethereum’s blockchain, Raydium has a project accelerator called the “AcceleRaytor” that helps new cryptocurrencies launch with liquidity on its platform. With such a large user base and sufficient liquidity, RAY is among the most established projects on Solana’s blockchain. You can buy Raydium on the FTX exchange and Uniswap.
Arweave (AR): A decentralized storage solution based on Solana’s blockchain. The project has funding from some of the highest tier venture capital firms in the space, including Coinbase Ventures and Andreessen Horowitz. The project introduced novel ideas of profit-sharing communities that incentive developers to use the platform, granting those who contribute to the ecosystem equity instead of selling equity to investors in presale or seed fundraising rounds.
Audius (AUDIO): With over 100,000 artists, 5 million listeners and a partnership with TikTok, Audius is primed to be the next generation of music streaming services. Through smart contracts and blockchain technology, Audius aims to replace centralized streaming platforms like Spotify and Apple Music. You can buy AUDIO on the FTX exchange and Uniswap.
How to Use Uniswap
Luckily, a lot of projects that are on Solana can also be accessed via DEXs on Ethereum. Uniswap is a great way to gain access to tons of new cryptocurrencies, and you don’t even need to make an account to use the platform. You will, however, need an Ethereum wallet to use Uniswap. If you don’t already have an Ethereum wallet, Metamask is among the best wallets for using DeFi, and it’s free.
Once you’ve downloaded a software wallet, you’ll need to send Ether tokens to your wallet’s address. Once your Ether is in your wallet, connect your wallet to Uniswap to gain access to thousands of cryptocurrencies that aren’t available on typical exchanges like Coinbase.
Need help getting your hands on some Ethereum? Check out some of the top U.S. exchanges that allow you to easily buy Ether tokens.
Read More:Best Cryptocurrencies on Solana • Ranked • Benzinga