(This article is reproduced from my personal Substack, you can read it on the Haodu version there)
Good morning, fellow angel investors 👼
After FTX collapsed in November 2022, the blockchains that were most affected were Solana and the $SOL token. After all, FTX was one of Solana’s largest investors. However, in the past three months, $SOL has begun to rise against the trend, seemingly successfully getting rid of the gloom and returning to the public's attention.
Today let’s take a look at Solana’s fundamentals, including its team, products and services, future prospects, token economic model, etc. If you’re thinking about getting into $SOL tokens, this is a report you need to read.
🕵️ Note: This article is my research and analysis, not investment advice. You must do your own homework before investing (DYOR). Any investment has risks! I will also disclose whether I have a position in $SOL later in the article.
文章目錄
0.0 Solana 項目簡介
1.0 Solana 團隊
2.0 Solana 產品與服務
3.0 Solana 未來展望
4.0 Solana 盈利能力
5.0 Solana 的風險＆挑戰
6.0 我的預測與想法（$SOL幣價）
7.0 參考資料
0.0 Solana project introduction
Solana is a Layer 1 blockchain that focuses on "high performance" and "high transaction speed (TPS, Transaction Per Second)". The biggest difference from other blockchains is that it uses Proof of History (PoH) to time stamp each block, which allows miners to complete the ledger more efficiently, reaching a maximum of 65,000 TPS speed.
Solana's goal is to become a decentralized payment and transaction platform that can serve everyone in the world. The benchmark is VISA (TPS about 2,000) and NASDAQ (TPS about 20,000) in the traditional financial world - but it is also this goal that makes Solana in the region In the impossible triangle of blockchain, we resolutely chose to pursue "ultimate performance" and relatively ignored "decentralization" and "security" (which we will talk about later).
1.0 Solana Team
To see whether the project will be successful, the team is the key. Let’s take a look at Solana’s team first, including the founding team, investment institutions, partners, and community.
1.1 Founding Team
Speaking of Solana, you need to know its founder and core figure: Anatoly Yakovenko, a Soviet computer engineer. Before founding Solana, he worked at Qualcomm, Mesosphere, and Dropbox, doing compression and performance enhancement of distributed operating systems (holding two patents). With these past experiences, he published the Solana white paper in 2017 and introduced the concept of Proof of History, hoping to create a "high-performance" blockchain in this way.
The main development team behind the Solana blockchain is currently called Solana Labs, and there is a "non-profit foundation" in Switzerland called the Solana Foundation. Its main function is to assist the development of the Solana ecosystem. By the way, this is a very common way of developing blockchain at present. The tokens issued by the project are sent directly to the non-profit foundation and are used to develop the project's ecosystem.
The engineering team is responsible for building facilities and helping Dapps who want to build on the blockchain to settle in
The non-profit foundation is more like the role of Business Development, responsible for developing the project's ecosystem (developing more Dapps, building communities, etc.)
1.2 VC investment institutions and investors
Solana has had a total of 3 large-scale private placement rounds, as well as an ICO on CoinList, as follows:
July 2019 (private placement): $20M raised, led by Multicoin Capital
March 2020 (ICO): approximately $5M raised
March 2021 (private placement): Invested by OKEx (now OKX) and MXC Exchange (Matcha), raised $40M
June 2021 (private placement): $314M raised, led by a16z and Polychain Capital
It is also worth mentioning that FTX and Alameda Research also participated in the private placement in June 2021, and are currently the largest holders of $SOL, with a total value of approximately $1,162M of $SOL (accounting for 10% of the circulating supply). If FTX goes bankrupt, they will inevitably need to sell $SOL to repay debts. We will talk about this in more depth in "Token Value" later.
1.3 Partnership
Solana has many partners, which can be found on this page. I will list some cooperations that I think are important:
Tether and Circle: the two largest stablecoin providers in Web3, successfully brought USDT and USDC to Solana
Shopify: A huge e-commerce platform that allows users to use Solana Pay directly on Shopify for payment
Helium: A decentralized wireless network. It originally had its own blockchain, but it was migrated to Solana in April this year. It currently has nearly 1 million network nodes and is expected to bring many users.
Visa: Traditional payments giant lets Visa payment users send USDC on Solana
1.4 Communities/Users
When evaluating public chain communities, I like to look at the level of activity on the chain, which is the number of active addresses. Solana's current average number of daily active addresses is about $380K, ranking among the top five among all public chains, about the same as Polygon and Ethereum, and its performance is pretty good.
Average daily active users of the public chain (Source: Token Terminal)
Anatoly Yakovenko is one of my favorite founders. He feels very similar to Gavin Wood (the founder of Polkadot) - both are talented engineers with strong technical backgrounds, but they have given solutions to the "scalability problem". Different ways of achieving it (Polkadot uses sharding, Solana uses a single chain).
The number of partners of Solana is smaller than that of other public chains, mainly because Anatoly does not like to use money to do BD (for example: Solana gives you money and lets you come to Solana to build). He prefers that the project is based on Solana's technology. I was attracted by nature
2.0 Solana Products and Services
Now let’s take a look at products and services. In this part, I mainly want to look at Solana’s core products and value propositions, and also look at how Solana is currently performing in the Layer 1 track.
2.1 Core products and value proposition
Solana's core product is naturally the "Solana Blockchain" as the underlying architecture, allowing Dapps developers to build their own applications on it, such as DeFi ecosystem, NFT market, or GameFi games, etc. The main customers of Solana's services are "Dapps developers" because as long as more applications are built on it, there will be more users; and the more users there will be, the more demand for $SOL tokens will increase.
What Solana has to do is: attract more Dapps developers to develop programs and applications on Solana. As long as developers and Dapps succeed, then Solana succeeds
The question is: There are so many blockchains, as an application developer, why should you choose Solana? Here we will talk about the value proposition that Solana can bring, which is the feature that makes it stand out from many blockchains: "high processing speed + low handling fees."
How fast? The current speed of the Solana blockchain can already be compared with the Visa and Nasdaq platforms, and in the future, clients such as Firedancer (which will be discussed later) may bring the speed to a higher level.
How cheap are the fees? Solana’s average single transaction fee is only $0.0002, which can be said to be the cheapest among all Layer 1 blockchains currently.
From the above two points, Solana seems to be the first blockchain in the industry to successfully solve the "scalability" problem. There is even a saying circulating in the Solana ecosystem: "OPOS — Only Possible On Solana"! What started as a joke has evolved into one of Solana’s signature promotions.
2.2 Market share and competitor analysis
When judging the market share of Layer 1 blockchains, I like to look at three numbers:
TVL (Total Locked Volume): How much money is on the chain
Active users (number of addresses): How many users are using the application on Solana
DeFi Activity (Transaction Volume): How much actual transaction volume is happening on the Solana blockchain
Solana's current TVL is only ranked fifth, which doesn't look like much on the surface - but if you look closely, you will find that Solana's transaction volume in the past 24 hours has reached $1B, and NFT's transaction volume has also reached about $8M. In fact, it is about the same as Ethereum, the largest public chain now, is not far behind.
Public chain comparison (Source: DefiLlama)
In addition, if you understand the calculation method of TVL, you will know that TVL is an indicator that is easily affected by the price of the token, but "active trading volume" is more objective. If we add the timeline, you will find that Solana (green line) has continued to surge in recent months on both Daily Active Address and DEX Volumes indicators, and has even successfully surpassed BNB Chain.
Public chain comparison (Source: Artemis)
Currently, the ways in which public chains solve "scalability" can be roughly divided into two categories: "sharding + Layer 2" and "single chain enhancement". Solana is one of the masterpieces of "single chain enhancement". As a Layer 1 blockchain that can truly solve "scalability" at present, you can see in the on-chain data that many users/transaction volumes are moving to the Solana ecosystem.
3.0 Solana Future Outlook
This section is divided into two parts: Solana’s current situation (Where is Solana now) and future roadmap (Where is Solana going).
3.1 Solana Current Situation
Since Solana issued its first block in 2020, the goal has always been to make Solana "faster" and "cheaper" - although this approach has also caused controversy such as "downtime", "not decentralized enough", etc. But they seem to have solved the problem of blockchain "scalability", including Solana's stable TPS and stable low handling fees. The main technologies completed are as follows:
State Compression: Using this technology, users can mint one million NFTs on Solana for only $110, allowing ordinary merchants to use NFT technology to issue membership cards and increase applications.
Local Fee Market: This technology allows Solana to separate transaction fees according to applications to ensure low fees (for example: blockchain congestion caused by NFT projects will not cause high fees for DeFi users). The operating mode is as follows
Local Fee Market operating model (Source: Messari)
Next, Solana officially entered the mobile phone industry in April 2023 and released Saga: a mobile phone that comes with its own wallet, has its own App Store, and is specially designed for Web3 users. The first phase has now been sold out, with the goal of selling 25,000 mobile phones and starting to build its own App store, which is expected to attract more people into the Solana ecosystem.
Finally, Solana has added a number of premium partners, and Helium Network, a.k.a. a decentralized network provider, is the one I’m most excited about. Helium Network abandoned its public chain in April this year and moved everything to the Solana blockchain, using Solana as the settlement layer. It is expected to bring many new users to Solana.
3.2 Future prospects
Solana published its own roadmap in December last year, and we can also get a rough idea of what Solana wants to do in the future in some interviews with Anatoly. The following is the narrative I compiled and what we can look forward to:
Firedancer Client: A client developed by Jump Crypto that makes Solana faster overall, reaching 1M TPS. At the same time, increasing the number of clients (currently only two) can also help Solana become more decentralized to a certain extent and avoid Single Point of Failure.
The snowball effect brought by Helium: There are currently more than 12,500 users using Helium. With the launch of the Saga mobile phone, Solana is expected to complete the integration next and introduce these users into the Solana ecosystem. Once Helium's cooperation shows success, more and more partners will join Solana, starting a snowball effect (see Polygon blockchain).
Solana payment: The speed of Solana blockchain seems to be able to support the payment needs of general users. Coupled with the cooperation with traditional industries such as Shopify and Visa, it is expected to see more payment cooperation and applications in the future. Now Solana is just waiting for the emergence of the stablecoin regulatory bill in the United States (the risks will be discussed later).
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The above is part of the report. Others include Solana’s profitability, risks & challenges, token investment analysis, etc. If you are interested, you can go to my Substack to read it. To be honest, before I studied Solana in depth, my attitude towards Solana has always been negative. I thought, "Why would anyone want to use a blockchain that is often down and not decentralized?" "Isn't Ethereum great? ?How can it be called Web3 if it is not decentralized?”
But now after going through a round of bull and bear transitions in the currency circle, and having a better understanding of the needs of institutions and retail investors for Web3, I found that maybe "decentralization or not is not so important to most people" and "everyone pays more attention to user experience. ,efficiency". The problem that Ethereum encounters now is that the number of users itself is too large and the scalability progress is very slow. Although the emergence of Layer 2 has alleviated the pressure on Ethereum to a certain extent, it has also caused incoherence in the user experience (no one likes to Money moves around).
I’m cryptocurrency researcher Max 🕵️, see you next time!
(This is reproduced from my personal Substack. Welcome to read the full article there. This article was produced on 12/19/2023, so some data have changed)
