The Pros And Cons Of Investing In The Solana Project At The Moment
2 min read
Solana is here to succeed – enough evidence, investment, community love and developer activities surround Solana that it’s bound to succeed unless the world turns upside down. If Crypto were to be a $100T market segment in near future, there is little to no doubt that Solana will be a multi-trillion dollar player in the pond. Therefore, most legit and useful Solana ecosystem projects would be successful and good investments in the long run.
A lot of talented developers are building the Projects/Dapps – to the extent that quality of the developers is driving the traction in the community and more developers towards Solana. As it’s said – “if you build it, they will come” – so a lot of good work is happening across many reputed projects.
Strong institutional support – this is somewhat unprecedented in crypto. At its current age, Solana has tremendous institutional support than any other L1s (for apples to apples comparison) ever had. That’s a very positive dynamic and thesis for investment.
Supply inflation for projects: This in my mind is the single biggest issue with all Solana projects at the moment. Most of them only have 5-10-20% of their total supply circulating and more supply coming to the markets as the tokens vest for the teams and investors. That creates a tremendous amount of sell pressure and very little demand as most of the tokens are for governance/staking purposes.
Concentrated ownership – 50-90% of the tokens across several top projects are held by a handful of people (VCs, Angels, Team) who can really manipulate the market, do pump and dump and retail investors can get screwed.
Hype cycle: Several of the Solana projects (almost all) have been victim of this. Initial institutional investment (FTX’ Alameda Research, Solana foundation invest in all reasonable projects), venture investments and IDO are enough to really pump the price to sky but almost ALL of them have then crashed severely. Look at Solend – IDO’ed at $6.5 per token, went up to $16 with the hype of several top investors and then crashed 90%. This is a typical Solana project story.