Bank of America: Solana Could Be the 'Visa

Time:2022-01-15 Source: 828 views Trending Copy share

Bank of America strategists say Solana will take a slice of ethereum’s market share thanks to its low transaction fees, scalability and ease of use.

Bank of America digital asset strategist Alkesh Shah predicted in a Jan. 11 research note that ethereum competitor Solana could become the “Visa of the digital asset ecosystem.”

The Solana network launched in 2020 and has since grown to become the fifth largest cryptocurrency with a market cap of $47 billion. It is an order of magnitude faster than Ethereum, has been used to settle more than 50 billion transactions, and minted more than 5.7 million non-fungible tokens (NFTs).

However, critics argue that its speed comes at the expense of decentralization and reliability, but Shah argues that the benefits outweigh the disadvantages:

“Its ability to deliver high throughput, low cost, and ease of use enables an optimized blockchain for consumer use cases such as micropayments, DeFi, NFTs, decentralized web (Web3), and gaming.”

He went on to say that due to low fees, ease of use, and scalability, Solana would take a slice of the market share of Ethereum, which could be relegated to "high-value transaction, identity, storage, and supply chain use cases." , Shah wrote.

“Ethereum prioritizes decentralization and security at the expense of scalability, which leads to network congestion and transaction fees that sometimes exceed the value of the transaction being sent.”

Visa processes an average of 1,700 transactions per second (TPS), but the network can theoretically handle at least 24,000 transactions per second. Ethereum is currently processing about 12 transactions per second on mainnet (and more on the second layer), while Solana is theoretically capped at 65,000 TPS.

Shah admits, “Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has trade-offs, as illustrated by several network performance issues from the start.”

Over the past few months, Solana has experienced more network performance issues, such as withdrawal issues recently confirmed by Binance on January 12, reports on social media about its performance delays on January 7, and 1 The DDos attack appears to have occurred on May 5, but Solana denies it.

Less than a month earlier, there was also an attack on Dec. 10, when reports of an initial DEX offering (IDO) on Solana-based decentralized exchange Raydium caused massive network congestion.

In an interview with Cointelegraph on Dec. 22, Solana Labs communications director Austin Federa said that developers are currently working to resolve issues with the network, particularly in improving transaction metering.

“Solana’s runtime is a new design. It doesn’t use EVM [Ethereum Virtual Machine] and has done a lot of innovation to ensure users have the cheapest fees, but there is still work to be done on the runtime side. "

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