- Solana (SOL-USD) is too cheap now. It’s down 43.3% year-to-date (YTD) from $178.52 at the end of last year.
- Given its move into payments recently, SOL-USD could move substantially higher.
- Developers now see it as a preferred tool to produce smart contracts, decentralized finance (DeFi) apps, and non-fungible tokens (NFTs) in the Web 3.0 space
Solana (SOL-USD) crypto has fallen too far, too fast, given its popularity with developers and smart contract users. As of April 26, it is down over 45% to $97.13, down from $178.52 at the end of 2021. Moreover, the 6th largest crypto, which has a market capitalization of $32.4 billion, is off 60.9% from its peak of $258.93 on Nov. 5.
Given how fast the Solana crypto platform can process and validate transactions, especially compared to Ethereum (ETH-USD), this seems overdone. Solana claims to be the fastest blockchain in the world and the fastest-growing ecosystem in crypto.
Moreover, it has been moving into the wallet and digital payments arenas. The wallet initiative is based on a collaboration between Solana Labs and Web3Auth. It can eliminate technical obstacles for consumers to set up wallets and move into the DeFi space.
Solana Labs announced the launch of Solana Pay. This is its first launch into digital payments, as described by CryptoPotato. The vision is that “digital money moves through the internet like data – uncensored and without intermediaries taxing every transaction.”
Solana As a Web 3.0 Platform
Solana Pay is a typical example of a Web 3.0 app. It refers to apps like Solana Pay that operate on a blockchain network like Solana or Ethereum for decentralized finance (Defi) uses.
Web 2.0 brought changes to the internet, with online platforms like TikTok, Twitter (NASDAQ:TWTR), Meta Platforms (NASDAQ:FB), and Instagram, among others. Web 3.0 leverages blockchain technology to bring verifiable, trustless, self-governing, permission less, distributed, and robust technology to apps.
Recently CoinTelegraph wrote that there is still an uphill battle for widescale adoption of Web 3.0 apps. There is a need to “create apps that can be deployed to run on multiple servers as a decentralized application (DApp) while still maintaining the same user experience expected in 2022.” In other words, scaling with DApps is still a big issue. This does not seem like an insurmountable issue.
Here is a typical example of a new Defi app that chose to use Solana for its Web 3.0 app. On April 25, CoinJournal reported that an app called Maple Finance launched on Solana. It is a decentralized corporate debt marketplace for institutional borrowers. Its initial fund pool has started with a $45 million pool for uncollateralized loans.
They expect to grow this over the next eight months. They hope to bring in $300 million by the end of 2022. The app should be able to “attract high-quality lenders and borrowers, create unprecedented growth opportunities for innovators building on Solana, and enable the entire industry to thrive.”
In effect, Maple Finance is sort of like a decentralized Lending Tree (NASDAQ:TREE), except with more security, speed, and lower fees and no middlemen f0r institutional investors using the Solana platform. That is what Web 3.0 is all about — supplanting Web 2.0 apps.
Where This Leaves Investors in SOL Crypto
Given its popularity with developers like Maple Finance, Solana will rise as a major blockchain platform for Web 3.0. As a result, expect to see SOL crypto rise significantly in price over the next several years.
A major reason is that Solana offers several hundred digit millisecond latency and transaction costs at a small fraction of a penny. It cuts out the financial middlemen that harangue the present financial system.
Here is a typical example. If you want to transfer some money in your banking account today to your PayPal (NYSE:PYPL) wallet, you have to wait for three to five business days for this transfer to clear with no fees. But if you pay for something with PayPal they are happy to make the payment immediately as long as they charge your account.
By contrast, with a Web 3.0 app like Solana Pay, you can transfer money seamlessly immediately with little or no fees. That is why SOL crypto is likely to move significantly higher as its Web 3.0 abilities take root.
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.