Bank of America: Solana Could Be the 'Visa of Crypto'

Bank of America digital asset strategist Alkesh Shah predicted in a Jan. 11 research note that Ethereum competitor Solana could become the “Visa of the digital asset ecosystem.”

Launched in 2020, the Solana network has since grown to become the fifth-largest cryptocurrency with a market cap of $47 billion. It is an order of magnitude faster than Ethereum, has been used to settle more than 50 billion transactions, and has minted more than 5.7 million non-fungible tokens (NFTs).

However, critics argue that its speed comes at the expense of decentralization and reliability, but Shah believes the benefits outweigh the drawbacks:

"Its ability to deliver high throughput, low cost and ease of use provides an optimized blockchain for consumer use cases such as micropayments, DeFi, NFTs, decentralized web (Web3) and gaming."

He went on to say that due to low fees, ease of use, and scalability, Solana will take a slice of Ethereum’s market share, which could be relegated to “high-value transaction, identity, storage, and supply chain use cases.” , Shah wrote.

“Ethereum prioritizes decentralization and security at the expense of scalability, which leads to network congestion and transaction fees that sometimes exceed the value of the transactions being sent.”

Visa processes an average of 1,700 transactions per second (TPS), but the network can theoretically handle at least 24,000 transactions per second. Ethereum currently processes about 12 transactions per second on the mainnet (and more on the second layer), while Solana is theoretically capped at 65,000 TPS.

Shah admitted, “Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has trade-offs, as evidenced by several network performance issues from the start.”

In the past few months, Solana has experienced more network performance issues, such as withdrawal issues recently confirmed by Binance on January 12, reports of performance delays on social media on January 7, and 1 A DDos attack appeared to have occurred on May 5, but Solana denied that was the case.

An attack also occurred less than a month ago, on Dec. 10, when it was reported that an initial DEX offering (IDO) on Raydium, a Solana-based decentralized exchange platform, caused massive network congestion.

In an interview with Cointelegraph on Dec. 22, Solana Labs director of communications Austin Federa said developers are currently working to fix issues with the network, particularly in terms of improving transaction metering.

"Solana's runtime is a new design. It doesn't use the EVM [Ethereum Virtual Machine] and has done a lot of innovation to ensure users have the cheapest fees, but there is still work to be done on the runtime side. "

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