Digital Payments Are a Chance for Solana to Grow Substantially

Solana - Digital Payments Are a Chance for Solana to Grow Substantially

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Solana (SOL-USD) is being weighed down by excessive negative sentiment. As of April 11, this Ethereum (ETH-USD) blockchain competitor is down 42% year-to-date (YTD) with prices throughout the day of $102 to $111. SOL ended last year at $178.52.

The crypto is designed to facilitate the creation of smart contracts, decentralized finance (DeFi) apps and non-fungible tokens (NFTs). Its purpose is to facilitate the creation of decentralized apps (dApps).

Solana claims to be the fastest blockchain in the world and the fastest-growing ecosystem in crypto. One measure of its real success so far is its Total Value Locked (TVL). That represents the total amount of money placed in smart contracts, staking deals, and related decentralized finance (DeFi) assets.

According to DefiLlama, Solana now has $6.6 billion tied up in TVL. That represents almost 20% of its $33.5 billion in market capitalization.

The TVL was $11.1 billion at the end of last year, so it has also declined nearly 41%. In other words, there is a huge correlation between Solana’s TVL and its stock price.

Move Into Payments Could Boost Solana

Recently, Solana has been moving into the wallet and digital payments arenas. The wallet initiative is based on the collaboration between Solana Labs and Web3Auth. It can eliminate technical obstacles for consumers to set up wallets and move into the DeFi space. In addition, Solana Labs announced the launch of Solana Pay. This is its first launch into the crowded digital payments space, as described by CryptoPotato.

Solana Pay hopes to dramatically undercut the high fees that other payments presently charge consumers. By comparison, Block (NYSE:SQ) has a market cap of $71.1 billion. This is more than double Solana’s $33.5 billion market cap. If Solana picks up half of that $37.6 billion upside, Solana could rise by $18.8 billion, or 56% more than its current level.

That is why Solana could make a major rebound from its present lows.

On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com, Newsbreak.com and Beehiiv.com.


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