- Solana led the recent crypto rally, as Bitcoin reached $30,000.
- Numerous factors contributed to the rally, including landmark technical developments.
- Solana is still facing technical issues, including major outages.
Solana, the self-styled high-performance blockchain, has been on a wild ride in recent months. Ongoing outages and concerns over centralization have shaken investor confidence. Nevertheless, the Solana team continues to deliver updates.
It seems like efforts have finally paid off, as Solana took advantage of the favorable market momentum in crypto.
The Bitcoin Rally and Macro Factors
On Tuesday, Bitcoin broke above the $30,000 level for the first time since June 2022. Driving the rally was a worsening economic outlook and its implications for Federal Reserve policy. In particular, investors expect that the Fed will scale back its rate hikes.
A reversal in monetary policy would mean relatively lower interest rates. This would benefit tech stocks and crypto projects like Solana. This led to a surge in crypto prices, with Solana leading the way.
On Tuesday, April 11, Solana’s price jumped 11% over a 24-hour period, leading to a broader crypto rally as Bitcoin surged to $30,000. The “Ethereum killer” traded at a peak of $22.5 following the rally and stands at $22.37 at the time of writing.
Solana Announces Major Upgrade for Web3 Apps
Macroeconomics helped spark Solana’s surge but wasn’t the only factor. Paving the way for was a recent landmark tech upgrade to its network that would enable the next generation of Web3 apps.
On April 6, Solana announced the implementation of state compression technology, significantly reducing the cost of building user-first Web3 projects.
State compression is Solana’s way of storing data directly on the blockchain, at a fraction of the regular cost. Using a data structure called Merkle trees, developers can store a small bit of data on-chain and update it directly in the Solana ledger.
While state compression can store any kind of data, its first use will be compressed NFTs. The Solana Foundation says that minting one million NFTs on Solana will cost just $110, making the Solana blockchain an even more attractive home for NFT projects.
On-Chain Staking Support on Crypto.com
In addition to technical developments, Solana also saw other favorable news. On Tuesday, April 11, Crypto.com announced it would support on-chain staking for Solana. This will allow users to earn up to 5% APR rewards for staking SOL tokens.
On-chain staking support on a major exchange makes staking Solana more attractive for its users. More people staking SOL will likely drive demand for the token as users lock up their tokens to earn rewards.
Solana is among the most popular tokens for staking. In 2022, users locked up more than 70% of all Solana tokens in staking pools to earn token rewards.
On the Flipside
- Solana has avoided major outages since February, which have plagued the network recently. Outages cause concerns among investors as they point to centralization risks. If a single point of failure can cause an outage, centralization is the likely culprit.
- Solana’s Web3 phone Saga launch event is set for April 13. The phone will have a range of Web3 features, including an app to store private keys.
Why You Should Care
Solana’s latest developments suggest that the project will continue to play a role in the future of Web3 tech.
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