Solana is down 78%. Is it time to buy?

The cryptocurrency bear market has made this “Ethereum killer” significantly cheaper.

This year has been brutal for Solana (SOL), down 78% year-over-year, and for the cryptocurrency industry as a whole. But despite the carnage, cryptocurrency projects continue to build and improve their ecosystems, preparing them for a potential rebound when market conditions improve.

Let's analyze the pros and cons of Solana to understand if it deserves a deeper look.

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What is Solana?

Solana is a blockchain platform designed to host decentralized applications (dApps) — autonomous programs that use smart contracts to offer services on the network. It is among several blockchains known as potential “Ethereum killers” for their superior speed and scalability compared to Ethereum, the current market leader in these offerings.

With an estimated transaction capacity of 50.000 per second, Solana’s speed leaves Ethereum (which can only handle 15 per second) in the dust. It also boasts a proof-of-stake (PoS) consensus mechanism, in which miners use existing coins to validate transactions and mint new ones. This is more efficient than Ethereum’s energy-intensive proof-of-work mechanism, in which miners must solve computational puzzles to keep the blockchain running.

But with Ethereum planning to transition to PoS this year (an upgrade dubbed “The Merge”), Solana can’t rest on his laurels.

The developers of the platform are working on new growth factors such as fintech, a bit like what happens and is explained in the Tesla Coin Reviews. In February, they launched Solana Pay, a blockchain-based payment solution designed to allow users to purchase goods and services using Solana’s native token and, perhaps more importantly, stablecoins pegged to real-world currencies like the U.S. dollar. While cryptocurrency payments are nothing new, Solana’s industry-leading speed will help set its product apart from the competition.

Network reliability has been a big challenge

Despite its many advantages, Solana is not without its flaws. The platform has long suffered from reliability issues, which may be starting to tarnish its reputation. Cryptocurrency news outlet Cointelegraph.com reports that Solana has already suffered five major outages in 2022, which may help explain its significant decline in valuation this year.

The most recent crash occurred earlier this month, and it left the network unable to reach consensus to confirm new transactions for several hours. But Solana’s developer, Solana Labs, is working hard to resolve these issues. Solana reports that developers have identified and resolved the issue by disabling the feature that caused the network to crash. While it’s impossible to know if the issue has been permanently resolved, investors can rest easy knowing that Solana has an active development team working to resolve issues that may arise on the network.

I still believe in Solana

With the cryptocurrencies in a bear market, it is understandable that many investors would want to wait a few months for things to cool down before buying anything. That said, Solana seems like a great way to bet on a cryptocurrency rebound due to its industry-leading technical capabilities. While network reliability is a major concern, the platform’s active development team could help it overcome these growth issues in the long run.