Is Solana A Good Investment After Network Outage?

Solana had a major network outage recently, but SOL is still a potential cryptocurrency worth watching.

Last Updated October 29th 2021

6 Min Read

Solana is one of the hottest crypto tokens that have been rising rapidly over the past few months. The price of SOL has been continually making new all-time highs gaining the attention of investors worldwide.

But the crypto stumbled earlier in September after its blockchain network suffered an outage for more than 17 hours. Solana is trying to bolster the network by promising to implement more protective steps. However, investors are more interested in knowing if they can reap a high ROI from Solana or not. Let us explore more.

What Happened With The Solana Network?

The price of SOL attempted to maintain its consistent rally even after the network outage.

Solana, the Ethereum-killer, was living up to its hype this year till the blockchain faced a prolonged outage and the price plunged. The system breakdown prompted several experts to expose the vulnerabilities in the functioning of the popular blockchain, especially when it comes to validating transactions.

The problem was called “resource exhaustion,” as the network could not cope with a surge in its activity. The excruciating 17 long hour breakdown kept $11 billion of investors’ money completely locked.

But later, when the problem was identified and initial steps to reset them failed, the Solana community suggested setting off a hard fork. This was a change in protocol to allow divergence of the network’s path from the last confirmed slot. The team also came out with a preliminary investigation report, titled ‘9-14 Network Outage Initial Overview’ on September 20, clearly describing what led to network breakdown and feasible measures that they would be taking to avoid this in the future.

However, the good news is that although the network was offline for 17 hours, no funds were lost, and it returned to full functionality in under 24 hours. Also, several crypto enthusiasts like Emin Gun Sirer, a founder of Ava Labs, said that Solana is still in its early days of development and issues can happen. Moreover, the platform is trying to bolster the network and promises to implement more protective steps to prevent any network issues in the future.

Check Out: Is It Worth Investing In Solana?

Solana’s Volatile Price Swings After Jim Carmer’s Announcement

Although SOL has been quite volatile earlier this month, it could likely soar higher in the coming days.

Yet another dip in SOL’s price was followed by the advice of CNBC’s Mad Money host Jim Cramer to investors. He cautioned investors about the Evergrande fallout that could disrupt markets across the board.

Evergrande is the second-largest Chinese property developer. It has been caught in a liquidity squeeze that could lead to failure of meeting bond obligations and closer to a damaging bankruptcy and sale of hundreds of commercial properties. This will largely impact the whole of China, putting banks, suppliers, home-buyers, and investors among those at risk.

Jim urged investors who have gains in their cryptocurrency portfolios to take some profits and avoid being caught up in the Evergrande fiasco. The price of SOL has been quite volatile on September 12 following Cramer’s profit call.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Why Invest In Solana?

Solana is one of the fastest-rising cryptocurrencies in the market today, making this the right time to buy SOL.

Solana is one of the most prominent competitors of the Ethereum network. Thanks to the ever-growing popularity of DeFi products, the demand for programmable and fast blockchains like Solana is increasing tremendously. With its super-fast and cheap network and its ability to connect to other blockchains, Solana has a major advantage in the competition for DeFi projects.

Solana has positioned itself as one of the fastest cryptocurrencies in the market right now. It claims to process at least 50,000 transactions per second (TPS) at the cost of less than $0.1 per transaction. This is really impressive, especially when traders are migrating from Ethereum because of its high gas fees.

Moreover, Solana says that with further improvements in its hardware, it could potentially reach 700,000 TPS. Apart from all this, Solana employs an easy-to-use Rust programming language that would help in driving further community adoption.

SOL’s Extraordinary Growth

Solana has grown over 300% in the past month and has been up almost 10,000% since the beginning of the year. With its smart contract capabilities, the token has benefited from the recent boom in NFTs, skyrocketing its price to new highs. Even with the latest crypto market sell-off, SOL was up almost 1,000% over the past six months.

The cryptocurrency has also made several inroads with NFTs this year, making this the right time to buy SOL. For instance, its Degenerate Ape collection of art has gained massive popularity. The collection includes custom apes with various traits, from glasses to sandwiches, each with different degrees of rarity. Some of the Degenerate Ape NFTs have sold for more than $1 million each. The sale of all these required SOL, which is one significant reason for its price rise.

In addition, Solana could be a good investment now as there are nearly 400 dApps (decentralized applications) on the platform now, including DeFi, NFTs, and gaming. Also, almost $12 billion is locked in the DeFi applications on Solana.

Is Solana (SOL) Still a Good investment?

The answer is yes, thanks to the token's scorching gains as well as the network’s advanced capabilities.

The larger picture indicates that the network outage could arguably be a blessing in disguise for this emerging cryptocurrency. The breakdown exposed the fact that there was too much activity going on in the Solana network. And an increased network activity speaks to Solana’s incredible success. It shows that the network has been attracting numerous developers, decentralized finance, or DeFi, projects, and end-users to the platform in just a matter of months.

With hundreds of applications and users on the network, Solana has achieved far more real-world relevance in the market, positioning itself as a good investment choice for investors. Some crypto enthusiasts even argue that Solana’s blockchain could be a potential long-term rival for Ethereum.

Nevertheless, the Solana foundation has learned from the recent outage and is propelling more network improvements moving forward. Also, most projects have kept faith in Solana even after the network breakdown and continue to build DeFi and NFT projects on the network. Moreover, several other projects are also waiting to launch in the pipeline.

Ethereum’s current fee structure is too much for applications such as gaming and micropayments. Solana is making the most out of this opportunity with its fast and cheap network. This is one of the many reasons why SOL’s price is rising higher, boosting Solana’s investability quotient.

Solana (SOL) Price Prediction

Analysts say that Solana is well-positioned as of now to be a potential investment option for investors.

Given its high energy efficiency and cost-effectiveness, some of the experts still remain optimistic about the future of Solana. With more projects joining the platform, the demand for SOL tokens will rise significantly, pushing its value higher.

According to CoinPriceForecast,

“Solana was trading around $6 at the beginning of 2021. However, since then the price of Solana has seen a rapid rise. Solana’s price at the end of 2021 will be $774.”

While Long Forecast says that,

“The price of the coin is expected to reach around $309 by the end of 2021.”

The Bottomline

Therefore, the future of Solana looks exciting with its efficient, fast, secure, and censorship-resistant blockchain that offers the open infrastructure needed for global adoption. It could be a good investment even after the network outage as it is still gaining huge traction from investors worldwide.

In the future, Solana could also be a better environment for particular financial applications that require high rates of transactions or data transference.