Solana Is Back as a Genuine L1 Contender: Coinbase

  • The exchange believes Solana is well-positioned to reassert itself as a genuine layer-1 competitor.
  • SOL now trades over $24, up from about $6 last year.

In a research report published on Wednesday, the US-based crypto exchange, Coinbase, argued that the fundamental value proposition of the Solana blockchain persists from a technical perspective, regardless of the widespread negative sentiment in the community.

The exchange noted that given Solana’s relative strength in current network activities, including transactions, users, and development, the blockchain is well-positioned to reassert itself as a genuine layer-1 competitor.

According to data from the market tracking website, CoinMarkeCap, Solana lost over $8 billion of its market share following the collapse of FTX. The research report hinted that Solana suffered an inordinate impact due to its historical relationship with the now-defunct FTX exchange.

Furthermore, Coinbase argued that the advent of the Solana protocol helped catalyze the proliferation of alternative layer-1 smart contract platforms observed in recent years. It said Solana network capacity for cheap and fast transactions attracted new users during the bull run of 2021, as other blockchains became prohibitively expensive.

Coinbase analyst Brian Cubellis states:

As a blockchain optimized for high throughput, de minimis costs, and native scalability, Solana represents a legitimately differentiated approach within the layer-1 landscape.

During the FUDs last year, two Solana-based NFTs, Y00topia and DeGods, announced that they would be migrating to other competitor chains, Ethereum and Polygon, in the first quarter of 2023. Both platforms jointly control over 25k NFT collections.

Notably, CoinMarkeCap data shows that Solana has almost completely recovered from the November blow. Its utility coin SOL now has a market cap of $9 billion and trades over $24, which is up from about $6 last year.

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