There are very few utility tokens that have as much growth potential as Solana’s native cryptocurrency called SOL.

SOL traded at $1.84 on January 1, 2021, which is impressive considering that it traded below 25 cents during its ICO. It has been on a strong parabolic run so far this year and managed to peak at 58.38 in May before a consolidation lowered its price to May lows of $19.11. Fortunately, SOL seems to be back to its strong gains and is currently trading at $43.53.

What is driving up SOL’s value?

 SOL’s impressive price performance is courtesy of its role on the Solana network. The latter is a blockchain created by Anatoly Yakovenko, a former software engineer at Qualcomm. Most crypto blockchains do not use a time reference when recording blocks on their network. Yakovenko noticed this and decided to build a blockchain with a decentralized clock.

Although the approaches used to develop the Solana blockchain are complex, the idea of time-stamping transactions brought about drastic improvements for the network. Anatoly realized that the SHA-256 mining algorithm used for Bitcoin mining could be adjusted to function as a clock. He also developed an optimized proof-of-stake consensus that allowed Solana to handle a large number of transactions without compromising on decentralization and network security.

Solana can handle more than 50,000 transactions per second and it is also compatible with smart contracts. It is also one of the blockchains that offer the cheapest transactions thanks to a proof-of-history component that is part of the proof-of-stake consensus mechanism on the Solana network.

Proof-of-history introduces a verifiable delay function to the SHA-256 mining algorithm, facilitating time-stamps for all the transactions on the Solana network. This mechanism of organizing data means validator nodes do not have to wait for other validator nodes to confirm their records and the result is the impressive transaction speeds, thus eliminating scalability concerns.

Solana’s network seems to jump the hoops of the blockchain trilemma and its impressive performance, as well as features, are the reason why it is currently one of the most appealing blockchain platforms for any decentralized projects. For example, the crypto exchange FTX selected Solana as the host blockchain for the SERUM decentralized exchange.

SOL inflation schedule and blockchain growth

SOL has an inflation schedule that kicked off in February at 8% which was voted upon by the Solana community in January 2021. However, the inflation rate will reduce by 15% annually until SOL’s annual inflation level reaches 1.5%. This will facilitate better tokenomics for the project and the future of the network.

As far as growth is concerned, Solana seems to be on the right track. The blockchain had more than 100 projects by the end of December 2020. The impressive growth rate also means more data needs, thus the partnership with decentralized storage platform Arweave for storage solutions.

There has been no shortage of projects on the Solana blockchain and this has contributed to the strong growth of the platform. The Solana team is diligently working on more developments that might sustain some more growth. However, investors should be cautious because the project does not have a clearly defined roadmap. Nevertheless, Solana does seem to have a lot going for it, especially at a time when other blockchains are struggling to overcome issues such as scalability and security.

Solana is so well-developed that some projects have migrated from other blockchains in its favor. For example, the Audius streaming service announced earlier this year that it was migrating from the Ethereum network. Its current pace means there will likely be more adoption in the near term and this might yield more growth for SOL.