Claimed to be “world’s fastest blockchain,” Solana (SOL) has been making news for its blistering transaction speeds and explosive token price. But are there gaps in the apparently flawless road or is Solana land all sunshine and rainbows?

Solana Takes The TPS Crown

Solana exceeded rivals including Polygon and Ethereum in transactions per second (TPS), based on CoinGecko data. Faster transaction processing times translate into a major component of scalability and mass adoption in the blockchain environment.

On closer inspection, though, the picture is more complex. Although daily active addresses—which show individual users connecting with the network—have grown, daily transaction count hasn’t kept pace. This points to a situation whereby more people are joining the Solana ecosystem but their transaction activity is not always high. Is there anything else at work or is this a case of casual crypto tourists sticking their toes in?

Fees Take A Tumble, But Is It A Sustainable Slide?

Solana’s declining transaction costs adds still another fascinating aspect. For consumers, this could sound like welcome news, but it could also be a two-edged blade. Reduced costs could suggest that the handled transactions are less complicated and call for less charges.

Long-term Solana’s income generating might thus be limited. A drop in costs could also indicate a decline in network congestion, which would help to explain the flat daily transaction count.

DeFi Keeps The Party Going, But Caution Flickers

Solana has one positive point: its Decentralised Finance (DeFi) Total Value Locked (TVL) is rising steadily. TVL shows the whole value of crypto assets placed in DeFi systems; DeFi is a suite of financial services developed on blockchains.

Rising TVL for Solana is becoming more and more popular in the DeFi market, where users could lock their crypto to profit from interest or start other financial endeavours. This suggests rather good conditions for the welfare of the Solana ecosystem.

Technical indicators like the Money Flow Index (MFI) do, however, raise some cautionary notes. This signal points to a possible SOL price adjustment and implies that the present increase might not be totally sustainable.

Add this to the inconsistent signals on network activity and the falling charge structure, and Solana’s long-term prospects are left under a question mark.

A Blockchain In High Gear, But the Destination Is Unclear

Unquestionably, Solana has outstanding transaction speeds and robust DeFi presence. Nevertheless, the general activity and tokenomics of the network call into doubt its long-term survival.

Data from CoinGecko showed SOL was trading at $185, up 7.1% and 26.0% in the daily and weekly timesframes at the time of writing. This price explosion and the network’s explosive transaction rates create a picture of an enterprise with enormous promise. Solana will have to answer the questions regarding its network activities and long-term viability, not to mention provide more gasoline for its price if it is to really become a major force.

Featured image from F1, chart from TradingView