Summary Solana's superior performance, low fees, and scalability position it to become the leading blockchain for decentralized applications that could reach mass adoption. Solana's ecosystem supports diverse use cases, including DeFi, DePIN, stablecoins, and tokenization of real-world assets. Upcoming upgrades like FireDancer will enhance Solana's performance and increase transaction capacity to up to 1 million transactions per second, solidifying its status as the top-performing blockchain. Despite its advantages, Solana remains undervalued compared to peers, presenting significant long-term upside. In this article, I will introduce the disruptive potential of blockchain technology and explain why Solana (SOL-USD) is positioned to become the leading blockchain ecosystem for decentralized applications. I will outline Solana's advantages over other blockchains and my investment thesis for buying and staking Solana tokens [SOL] for the long term. While most investors are at least somewhat familiar with bitcoin by now, far less understand the magnitude of the shift towards decentralization that is imminent as blockchain technology is adopted. Bitcoin has a simple use case - a decentralized non-sovereign store of value without intermediaries. Alternative blockchains and cryptocurrencies such as Solana extend beyond just digital currency, providing the ability to transform virtually any industry with smart contracts. Vision of a Decentralized Economy At its core, blockchains remove the need to trust central intermediaries (banks, governments, corporations) instead empowering the network's participants to transact directly with each other in a trust-less network. By removing intermediaries, participants on the network are empowered, processes are democratized, and fees to middlemen are eliminated. Blockchain networks are inherently democratic and capitalistic. Alternative blockchains allow developers to build Decentralized Applications (DApps) and marketplaces that benefit from their decentralized, global, and permissionless ledgers. Below are some examples of the capabilities and benefits of decentralized applications: Ability to instantly send any sum of money anywhere in the world without bank delays or fees. Instant settlement of transactions, including trades, payments, loans and transfers. Eliminating payment processor fees, point of sale transaction fees, and credit card fees on daily spending. Content creators on social media can own their content and get paid from advertisers directly, instead of relying on companies like Facebook, YouTube, and Twitter to pay small portions of advertising revenue to creators. Owning your own personal data online and having the option to get paid for sharing it, instead of being pressured into signing lengthy terms and conditions agreements from companies that profit off your data for free. The use cases of blockchain technology are endless, and many such solutions are gaining serious traction. To enable decentralized applications to reach mass adoption, a high throughput, scalable, low fee, and reliable blockchain is required. Solana - 'The Internet Capital Markets' Since its launch in 2020 by co-founders Anatoly Yakovenko and Raj Gokal, Solana has become one of the most popular blockchains on the market due to its significant performance advantages and vibrant ecosystem. In an investment thesis published by MultiCoin capital , an early investor, Solana is described as the 'Internet Capital Markets'. This description succinctly conveys the concept that almost any asset imaginable can be tokenized and efficiently traded on Solana, like how equities are traded on the Nasdaq. Traditional financial securities (TradFi) such as equities, bonds, derivates, foreign exchange, commodities, and real estate can benefit from moving on chain, and entirely new blockchain-native asset classes are being created. Solana’s Advantages Market Leading Performance and User Experience Solana’s technology outperforms competing blockchains such as Ethereum, the largest alternative blockchain and cryptocurrency. It has a much higher throughput, faster block times, and drastically lower transaction fees (fractions of a cent per transaction vs several dollars on Ethereum), making it ideal for high volume applications. Other high-performance L1 blockchains have attempted to compete, such as Aptos (APT-USD), Near Protocol (NEAR-USD), Avalanche (AVAX-USD), and Cardano (ADA-USD). These blockchains have much less network activity and have not yet demonstrated meaningful advantages over Solana when assessing on chain performance metrics. Solana has become the market leader in key performance metrics such as number of monthly active users, fee revenue and number of daily transactions, surpassing Ethereum, its layer 2’s, and all other competing blockchains. Crypto Daily Transactions Comparison (Created in Excel using Data from Artemis) MAU Comparison (Created in Excel using data from Artemis) Ethereum’s layer-2 strategy has faced challenges such as frictions in the user experience, incentives driving developers out of the ecosystem, and centralization concerns. As a scalable layer-1 blockchain, Solana provides an improved and simplified user experience that is ideal for creating scalable decentralized applications. Vibrant Developer Ecosystem An active network of developers, users, and ecosystem contributors is necessary to maintain a functional and decentralized blockchain. The Solana ecosystem has attracted some of the most talented developers and engineers in the world, many of whom have migrated from Ethereum. In 2024, Solana onboarded the most new developers of any blockchain ecosystem in the World. The average number of weekly active developers in the Solana ecosystem also surpassed all competition in 2024, demonstrating that the market is choosing to build on Solana. Weekly Active Developers (Created in Excel using data from Artemis) Upcoming Improvements to the Network A major upgrade is also nearing completion that will further solidify Solana as the top performing blockchain on the market. A new validator client called FireDancer is likely to launch in 2025 that will increase Solana’s transaction processing capacity to 1-million transactions per second (TPS), from its current capacity of 65,000 TPS. This will improve the networks security and reliability and reduce the risk of downtime. FireDancer will further solidify Solana as the fastest and most scalable blockchain on the market, outperforming the theoretical performance metrics of up-and-coming blockchains such as Aptos . The network is regularly being upgraded and improved, anyone in the ecosystem can submit a Solana Improvement Document (SIMD) proposal to suggest a change. If the proposal gains enough traction and support, the community will vote on whether to implement it. SIMD proposals are core to Solana adapting to the changing market landscape and remaining the dominant blockchain platform. Applications and Use Cases Given its low fees and superior performance, Solana has the potential to become the leading blockchain for DeFi, stablecoins, payments, and tokenization of Real-World Assets (RWA). In the paragraphs below, I will outline some of the use cases and applications built on Solana to demonstrate its utility. An exhaustive list of use cases would be impossible to summarize in one article, so I encourage the reader to research the various projects in the Solana ecosystem. Map of the Solana Ecosystem (Messari.io) Stablecoins and Payments Anyone who sends funds internationally or manages payments across various currencies understands that the current system is slow, expensive, and feels outdated. Stablecoins that are pegged to the US-Dollar and backed by US treasuries resolve these issues and are rapidly gaining traction. Stablecoins enable global payments that are instantaneous with minimal transaction costs, bypassing the slow and expensive bank intermediaries. $200B worth of stablecoins backed by US treasuries have been minted in total, $30B of which was created in Q1 of 2025 . Stablecoins are also slashing payment processing expenses for businesses, reducing the reliance on intermediaries such as Visa, MasterCard, and banks. Payment processing expenses are a significant drag on corporate profits, especially for businesses with low margins. An article published by A16Z demonstrates this well by using Kroger's grocery stores as an example: “Astonishingly, Kroger’s net income and cost of payments may be almost equal. Like many grocers, its margins are below 2%, less than the amount businesses pay to process credit cards. Kroger could potentially double its profits with stablecoin payments.” The use of stable coins for payments can dramatically improve profit margins for businesses, while also providing convenience and lower fees for consumers. This dual benefit creates a powerful network effect that is encouraging mass adoption. Solana is on the forefront of this technology, with $12B worth of stable coins minted on the platform, which grew 130% in the first quarter of 2025 alone. Stablecoin Market Cap on Solana (DefiLlama) It is no longer solely retail investors that use stablecoins either, usage among institutions is accelerating. Shopify recently integrated stablecoin payments on Solana, eliminating bank fees, chargebacks, and holding times while enabling immediate, direct payments. Additionally, PayPal, Robinhood, and Visa all announced stablecoin integrations with Solana. The new administration in the United States is ushering in a new era for cryptocurrency and stablecoin payments by providing regulatory clarity. Although it may appear counterintuitive at first, it is logical for the US government to support and encourage stablecoin adoption as they drive demand for US treasuries and solidify the US dollar as the world’s reserve currency. David Sacks, the ‘AI and Crypto Czar’ under the Trump administration, recently stated in a press conference : Stablecoins have the potential to ensure American dollar dominance internationally to increase the usage of the US dollar digitally as the world’s reserve currency, and in the process create potentially trillions of dollars of demand for US Treasuries, which could lower long-term interest rates. Stablecoins are especially prevalent in developing countries with inflationary and unreliable fiat currencies, providing banking solutions to the unbanked population globally. Decentralized Finance (“DeFi”) DeFi is a broad term used to describe decentralized applications that provide financial products and services to users. DeFi protocols and exchanges such as Jupiter, Drift, Raydium, Orca, MarginFi and others have gained traction, enabling trading, borrowing, lending, leverage, and derivatives in a decentralized and permissionless environment. Traditional financial securities could also benefit from being tokenized on chain from more democratized markets, instant transaction settlement, and lower transaction fees without intermediaries. I believe the next generation for markets, the next generation for securities, will be the tokenization of securities. - Larry Fink, CEO of Blackrock When BlackRock , the world’s largest asset manager with $12 Trillion in assets under management is betting on tokenization using Solana , it’s time to pay attention. Although Ethereum has the first mover advantage in DeFi, Solana is rapidly gaining market share. Solana recently became the leading blockchain in Decentralized Exchange (DEX) volume, a key DeFi performance metric, surpassing Ethereum and all other chains. The trend shows that Solana is directly capturing share from Ethereum. Solana and Ethereum Market Share of DEX Volume (VanEck monthly recap, Data from Artemis) Decentralized Physical Infrastructure Networks (DePIN) DePIN is one of the fastest growing sectors in crypto, and the Solana blockchain hosts some of the leading DePIN companies. DePIN refers to projects that are decentralizing physical infrastructure across industries such as telecom, data storage, energy, and computing to name a few. DePIN projects reward people for helping to build and operate the infrastructure they depend on, whether it’s from providing data, compute power, or running hardware. For example, Helium is the world’s first and largest decentralized wireless network, which allows anyone to create a hotspot and earn rewards from users or IOT devices that connect to the internet through it. Through its network of community operated routers, Helium offers low cost 5G phone plans to users, built on Solana. Other DePIN projects gaining traction on Solana include HiveMapper (decentralized online maps) and Render (democratizing access to GPU computing power). The low cost, high throughput nature of Solana makes it the ideal platform for DePIN projects. Valuation Metrics Components that contribute to SOL token value include its utility, staking yield, and Maximum Extractable Value (MEV) , which are all influenced by the level of on-chain activity. In January 2025, Solana recorded the highest monthly aggregate revenue and fees in the market despite having lower fees per transaction, demonstrating Solana’s leading on-chain activity. Similar to equity valuation, multiples and ratios can be used to compare cryptocurrency valuations. Despite Solana’s superior performance metrics, growth, and activity, its market capitalization remains at ¼ of Ethereum’s and trades at discounted valuation multiples in comparison to peer averages. Comparable Valuation Multiples (24 hrs as of March 25) (Created in Excel using data from Artemis) Total Value Locked Total Value Locked (TVL) is a common metric used to evaluate and compare the utility and adoption of blockchains. It measures the total value of crypto assets staked or locked in Dapps and DeFi platforms on the blockchain being assessed. Ethereum is currently the market leader in TVL at $46B. Solana has the second largest TVL among comparable blockchains at $6.8B. Solana’s TVL grew an impressive 67% in the past year, while most other chains such as Ethereum, Avalanche, Cardano, and Near all had declining TVL. Aptos recorded a larger gain, but it’s TVL is less than one sixth the size of Solana’s. The trend shows that Solana is outperforming its peers in TVL growth and is gaining ground on Ethereum. Total-Value-Locked of leading altcoins (Created in Excel using data from Artemis) Addressing Criticisms of Solana Look Beyond the Memes One of the most common criticisms of Solana is that its volume is driven by meme coins and unscrupulous activity. Investors should not use this as a reason to dismiss Solana as an investable cryptocurrency. Chris Dixon, a partner at venture capital firm a16z summarizes this concept well in his book ‘Read, Write, Own’, using the early days of the internet as an example. Many investors argued that the internet was a breeding ground for scams and illicit activity. In many cases, they were right, as most ‘dot com’ businesses failed. As it matured over time, high utility websites and applications ultimately prevailed. Another example is the App Store. When Apple first released the App Store in 2008, most of the early applications on it were silly games and gimmicks without much (or any) utility. Apps that made fart noises or mimicked drinking beer on the iPhone dominated the charts in 2008. It took several years before applications like Instagram, Uber or Airbnb ultimately led the App Store to become the powerful mobile marketplace that is today. While it is true that Solana hosts meme coins and speculative activity, this appears to be a symptom of being an early-stage internet-native technology. Investors that dismiss it as just a platform for meme coins are overlooking the disruptive capabilities of the Solana blockchain. Inflation Solana’s inflation follows a fixed schedule that tapers by 15% annually, until it reaches a final inflation rate of 1.5% per year. The current inflation rate is about 4.64% as of March 25, 2025. While some may argue that Solana’s inflation is too high, some level of inflation is necessary to incentivize validators to secure the network and maintain a functional ecosystem. The staking yields also more than offset inflation, rewarding long-term holders. A recent proposal to reduce Solana’s inflation rate from its current fixed schedule to a market-driven approach received the highest voter turnout of any SIMD proposal in Solana’s history, but ultimately failed to pass indicating that the community prefers the current fixed schedule to a lower, market dynamic schedule. Token Unlocks In March 2025, Solana faced a large unlock of tokens that amounted to about 2.4% of the circulating supply . This unlock was a result of the liquidation process from the collapse of the FTX exchange in 2022. The anticipation of the token unlocks contributed to significant selling pressure in Q1, 2025. Now that this large unlock has passed, selling pressure should subside as a result. Recent Price Performance The cryptocurrency sector has historically been cyclical, with rapid price appreciations followed by drawn out bear markets, leading to a volatile but upward long-term trend. As crypto adoption continues, volatility can be expected to slowly decrease over time. Although Bitcoin outperformed altcoins such as Solana year to date in 2025, Bitcoin has a different purpose as a store of value that is less comparable to altcoins, which tend to trade on a delayed cycle. As a larger and more mature asset, bitcoin is less volatile than altcoins such as Solana. The macro environment in the first quarter of 2025 has been unfavorable for equities and cryptocurrencies alike, leading to significant declines in both asset classes. It is normal for Solana to underperform bitcoin in market drawdowns and outperform during bull markets as a higher beta asset. As the most performant alternative blockchain on the market, Solana appears well positioned to outperform other cryptocurrencies when market sentiment turns positive again and recognizes the utility and value altcoins. Risks Regulatory Landscape The changing cryptocurrency regulations from governments around the world present considerable risks for investors. Government policy can significantly influence the usage and adoption of cryptocurrency. However, the new US Administration recently reduced the regulatory risk in the United States by encouraging the adoption of cryptocurrency and providing transparency in its cryptocurrency policies. Technology-Specific Risks Solana relies on cutting-edge software, which has some risk of outages and technological failures. Solana faced outages in 2023 and February 2024 that had considerable impacts on SOL prices at the time. As the ecosystem matures, the risk of outages will be reduced over time. Solana has not faced an outage in over a year, despite record on-chain activity. Macro Volatility The cryptocurrency sector has historically been highly volatile and cyclical. Large price swings in both directions are common and can lead to substantial gains or losses for investors. Given the upward trend in long-term crypto prices, this risk can be reduced when using multi-year time horizons. Competition The competitive landscape in blockchain and cryptocurrency is rapidly evolving. Risk is present from larger platforms such as Ethereum, and up-and-coming blockchain platforms that could gain market share. Conclusion Solana holds advantages over competing blockchains due to its superior technical performance, ecosystem activity, and financial metrics. Solana is becoming the most viable blockchain for entrepreneurs and businesses to seamlessly launch applications capable of mass adoption. Based on its discounted valuation multiples, Solana appears undervalued in comparison to Ethereum and other competing blockchains. Solana's reputation is shifting, Institutional investors such as BlackRock , Franklin Templeton , and Fidelity are building on Solana, creating the potential to unlock billions of dollars in institutional demand. Despite the short-term uncertainty that is typical in the cryptocurrency market, Solana presents a compelling long-term buy opportunity with the potential to become the backbone of the emerging decentralized financial system.