The price of Solana’s SOL token is up over 17,000% so far this year and has already flipped the market capitalization of Cardano ($ADA) to become the fourth-largest cryptocurrency by market capitalization, with over $72 billion. Ahead of it is Binance Coin ($BNB), with a $92.8 billion market capitalization.
At press time, SOL is trading at $238 after hitting a new high above $245 and dropping shortly after. At the beginning of the year, the cryptocurrency was trading just under $2, according to available market data.
Solana is a high-performance blockchain founded by former Qualcomm, Intel, and Dropbox engineers. It uses a delegated Proof-of-Stake (PoS) consensus algorithm and a unique method of ordering transactions to significantly improve its speed and throughput.
With the use of Proof-of-History (PoH) the Solana network can handle thousands of transactions per second. SOL itself is used to pay for transaction fees when moving funds and interacting with smart contracts on the network.
The token can also be staked as part of the network’s consensus mechanism, allowing token holders to earn staking rewards. Solana’s high transaction throughput has seen it at one point handle a peak of 400,000 transactions per second.
That demand ultimately caused the network to crash and remain offline for 17 hours. Network validators were then able to restart the network the same day it went down, although for some investors confidence was lost.
Some analysts, Forbes reports, have suggested Solana’s price has been benefitting from an increase in ether’s price, which has been followed by rising transaction fees on the Ethereum network. Jason Lau, COO of crypto exchange Okcoin, was quoted saying Solana tends to experience rallies when ETH does, adding Ethereum gas fees are up 2,000% since June.
This has seen retail investors move away from Ethereum and into Solana. According to DeFiLlama, Solana’s decentralized finance (DeFi) space already has close to $15 billion in total value locked in it, up from $13 billion late last month.
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