Solana's Rally: A Burning Threat to Ethereum's Dominance

• Solana (SOL) and its Rise in the Crypto World
• The Downfall and Rebound of Solana
• Crypto Market Capitalization
• An Overview of Recent Events
• Ethereum Still the Preferred Choice for Smart Contracts
• Reflections on a Decade Past: Mt. Gox Hack

Solana (SOL) and its Rise in the Crypto World

In the previous year, Solana$104 5.03% (SOL) created an impressive buzz as enthusiasts acclaimed its potential to address the primary issue with the Ethereum$2,315 -2.42% (ETH) blockchain. The promise was a more efficient and cost-effective platform for transactions, making it an ideal launchpad for Decentralized Finance (DeFi) and other activities powered by smart contracts.

The Downfall and Rebound of Solana

Unfortunately, the year 2022 brought about a series of challenges, casting a grim shadow over Solana, and generally on the entire crypto sphere. The association of Sam Bankman-Fried with Solana and its SOL token, which plummeted below $10, didn't exactly help matters either. However, SOL managed to recover to the $20s by October, concomitant with the trial of Sam Bankman-Fried. Suddenly, Solana and SOL became incredibly popular, with SOL exceeding $100 for the first time since early 2022. With a market capitalization of $47 billion, it ranks as the fifth-largest cryptocurrency, and was temporarily in the fourth position earlier in the week.

Crypto Market Capitalization

• Bitcoin (BTC): $854 billion
• Ethereum (ETH): $288 billion
• Tether (USDT): $92 billion
• BNB: $49 billion
• Solana (SOL): $47 billion
• XRP: $35 billion

An Overview of Recent Events

Danny Nelson aptly summarized the recent events when SOL breached the $100 mark. He noted that the past few weeks had witnessed intense trading that briefly propelled Solana to the top of the leaderboard for on-chain activity. The trading volume of Solana-based decentralized exchanges is nearing Uniswap's multi-billion-dollar volumes for the first time, as per DefiLlama. This fervor is primarily propelled by speculative trading. Prominent crypto assets currently being traded on Solana include dog-themed meme coins. However, airdrops are also attracting numerous traders to experiment with Solana-based lenders, bridges, and other infrastructures.

Ethereum Still the Preferred Choice for Smart Contracts

Ethereum retains the top spot among layer-1 blockchains capable of running smart contracts, the cornerstone of DeFi. With a total value lock of $29 billion, Ethereum's monetary investment within its ecosystem significantly surpasses Solana's $1.5 billion, according to DefiLlama data. Nevertheless, recent events suggest that Solana may now be a formidable competitor.

Reflections on a Decade Past: Mt. Gox Hack

Reminiscing over the last decade, the infamous Mt. Gox hack underlines the need for improved infrastructure in the crypto industry for it to thrive or even just survive. This breach resulted in a loss of about 850,000 bitcoins, now valued at nearly $36 billion. A decade on, it appears that former customers are beginning to receive their reimbursements.

As per some coverage, the repayments might impact bitcoin prices due to the sheer volume of tokens being released, but it's not expected to destabilize the market, according to a report by UBS earlier this year.

Edited by Jonathan Stoker