The self-described fast blockchain darling Solana is fighting uphill. A confluence of a larger crypto market decline and ongoing network congestion threatens to stop its momentum and question its long-term survival.
Solana Slides With The Market
Solana has not escaped the current market corrections in cryptocurrencies. Enjoying a great run for months, the token has reflected the general downturn. Solana plummeted to $127 on Tuesday, April 30th, a daily drop of 4% and a weekly drop more than 10%.
Lingering Congestion Woes Plague Solana
Although the state of the market worries us, Solana’s network congestion problems looks to be more urgent. Not the expected network decongestion from recent fixes meant to address a QUIC protocol flaw.
The transaction failure rate is persistingly high at above 65% as of April 29th. This ongoing network slowness obviously runs counter to Solana’s basic value proposition of great transaction speed and efficiency.
Source: Dune Analytics
For industries like Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs), which mostly rely on quick and dependable transactions, the congestion problems especially concern them. Solana has found a niche in these fields, hence extended congestion could damage its standing and discourage next users and initiatives.
Investor Optimism On Hold, But Long-Term Signals Remain
Fascinatingly, investor response to the congestion hasn’t been quite negative yet. Solana’s price movement suggests investors might be waiting and seeing, since it has mostly reflected the direction of the larger market.
SOL 24-hour price action. Source: Coingecko
Maybe there’s a sliver of hope Solana could overcome these obstacles. Although the short-term technical indicators present a negative picture, some long-term signals—such as the 200-day moving averages—still show some promise.
Total crypto market cap currently at $2.082 trillion. Chart: TradingView
Solana At A Crossroads
Solana will depend critically on the next weeks and months. Can it surely solve the problems with network congestion? Will it be able to rebuild the confidence of investors and developers rocked by the current performance?
Solana’s capacity to negotiate these choppy seas will determine its destiny. Should it be able to surmount these obstacles and come out with a more strong and scalable network, it may merely ride out the storm and take back leadership in the blockchain field.
Should the congestion issues continue, Solana may find herself lagging behind rivals able to provide a more consistent and dependable customer experience.
Featured image from Pexels, chart from TradingView