The DeFi sector faced a new wave of growth in the early days of 2021. However, the new surge in interest also showed the lack of scalability and speed — something that Ethereum’s network cannot offer as of yet. In order to replace it, DeFi participants began turning to alternatives, with Solana (SOL) seemingly becoming the most popular one.
The DeFi rally leaves traders wishing for a better solution
The cryptocurrency industry has faced a boom over the past months. Crypto prices have surged, and the recent month-long rally has already taken Bitcoin twice as high as its 2017 ATH.
The DeFi sector itself is progressing rather nicely, recently hitting a new all-time high when it comes to total value locked (TVL) at $22.82 billion. However, with DeFi still mostly taking place on Ethereum (ETH) blockchain, the project’s lack of scalability and speed are becoming a problem, especially as these lacks tend to boost transaction fees’ prices.
ETH did start the roll-out of its Ethereum 2.0 on December 1st, 2020, but it will take some time before its blockchain starts to deliver on the promise of fast and cheap transactions.
Amid all that, the DeFi sector started turning to alternatives, and the most popular one in the last six months seems to be Solana (SOL).
Solana emerged at the right time to become a popular Ethereum alternative
Solana is a project launched by Anatoly Yakovenko, with a team consisting of former engineers from several well-known companies, including Qualcomm, Dropbox, and Intel. The project claims to be a censorship-resistant blockchain that can provide open infrastructure and help global adoption.
All of this made users start considering it as a competitor to Ethereum, including FTX derivatives exchange’s CEO, Sam Bankman-Fried, who supported it by choosing this platform to host its DeFi project.
Solana’s SOL token saw a sharp rise in volume and price after this, as many others rushed towards the project. Its volume headed from $1 million to $41 million, while the price spiked from $0.9 to $4.89. Its price did fall to $1.21 when the DeFi surge ended, although it managed to climb back up to $3.1.