What is Solana ? Why is Solana’s price increasing in December 2023 ?

By Raghav Sawhney

Solana (SOL) represents a blockchain network created to support decentralized and scalable applications. Launched in 2017, it operates as an open-source project overseen by the Solana Foundation, headquartered in Geneva, with the technical development managed by Solana Labs based in San Francisco.

Distinguishing itself from other blockchains like Ethereum, Solana boasts rapid transaction processing capabilities and notably lower transaction fees. Its native cryptocurrency, also named Solana (SOL), skyrocketed by nearly 12,000% in value during 2021, briefly reaching a market capitalization exceeding $75 billion, positioning it among the top cryptocurrencies at the time.

However, despite its surge, SOL encountered the market downturn of 2022. By December 29, 2022, SOL’s market capitalization had dwindled to approximately $3.63 billion. Yet, within a year, it managed to recuperate nearly half of the market value it had previously lost.

Key Highlights:

  • Solana serves as a platform for scalable and decentralized applications.
  • Solana has reached price levels reminiscent of April 2022.
  • It surpassed Ripple and subsequently Binance Coin in market capitalization.
  • It stands out with its ability to handle a significantly higher number of transactions per second and lower transaction fees compared to rival blockchains like Ethereum.
  • Solana operates on a proof-of-stake (PoS) model but enhances this with a mechanism called proof-of-history (PoH), utilizing hashed timestamps to validate transaction timing.
  • Chart analysis indicates a significant surge, marking a higher high at $146.

Why is Solana (SOL) price up this week?

The rise in SOL’s price seems to be influenced by Ethereum’s increased gas fees and Solana’s distribution of airdrops like Bonk. Solana’s ticker symbol SOL has surged by over 60% during the week ending on December 24, reaching $118, marking its first time hitting this value in eighteen months.

Ethereum experienced a significant surge in transaction costs, briefly exceeding $10 per transaction, and in some cases, users reported fees as high as $150 for a $50 transaction.

Despite a subsequent decrease of over 50% in Ethereum’s gas fees from their recent peak, this spike prompted users to seek alternative blockchain platforms with more affordable transaction fees. This surge in user interest likely contributed to the positive momentum in Solana’s price in recent months.

As an example, active addresses on Solana surged by nearly 400% in the last three months, a notable contrast to Ethereum’s modest 3% increase, as reported by Messari.

Solana Price Analysis

Solana’s price hit its lowest level since the all-time high on December 29, 2022, dropping to $8. It underwent consolidation, encountering resistance around $30 while forming higher lows. Eventually, the price surged above this resistance towards the end of October.

In a broader upward trend, the current upward movement began around September 13, likely constituting wave 3 within a five-wave impulse pattern starting from the $8 low. Solana recently reached its first lower structure after the all-time high at $80, presenting another resistance point. While the price appears overextended, reaching a potential stopping point, there are no immediate signs of struggle indicating an imminent downturn.

Solana Price Prediction

On the hourly chart, indications of resistance are visible as the price has maintained a sideways movement since reaching yesterday’s peak. However, the ascending support suggests an increase in buying pressure, hinting at a potential breakout.

A move towards a higher high, possibly reaching $146, seems probable. In the short term, SOL’s price may aim for another high around the $146 area, supported by the previous daily chart pattern. Yet, this could mark the conclusion of the current upward trend, prompting a correction for a larger wave 4.

The exact outcome of this correction remains uncertain despite numerous resistance levels being breached. However, the most notable resistance lies at approximately $80, which could serve as the initial target for the price to retrace. If this scenario unfolds and the price finds support around $80, it might initiate another upward trend for a larger wave 5, potentially leading to a new all-time high at the beginning of 2024.

Solana’s Ranking Among Cryptocurrency Companies: How Solana (SOL) flips BNB and XRP to become fourth biggest coin in December 2023

Solana achieved a significant milestone on Sunday, December 24, by surpassing Binance Coin (BNB) in market capitalization, securing the fourth position in CoinMarketCap’s rankings. Presently, Solana’s market capitalization stands at $50 billion, surpassing BNB’s $40.6 billion. This accomplishment coincides with a broader crypto market rally, propelling SOL’s price to $119, marking an impressive 67.3% surge over the past seven days. Additionally, Solana has surpassed Bitcoin and Ethereum in trading volumes on Coinbase, marking a notable development. Notably, Solana has also seen a remarkable increase in decentralized exchange (DEX) volumes, outpacing all other chains by 3,078% in trading volume compared to Ethereum.

Airdrops on Solana boost’s User Activity on Solana Network

The recent airdrops, notably the Bonk memecoin, significantly contributed to the increase in daily active addresses and the price surge on the Solana blockchain. Moreover, Solana’s decentralized exchange volume has surged and claimed a top position this week.

Solana’s ability to offer lower transaction costs has led to a rise in the creation of new addresses, especially beneficial for those seeking airdrops. For example, Solana consistently maintains fees below $0.01, as reported by CoinCodex. However, some critics on social media argue that these reduced fees come with their own set of drawbacks.

Solana has drawn significant institutional capital this week following a successful period of fund flows

During the week ending December 16, investment funds associated with Solana received $10.6 million in inflows, surpassing the inflows of leading competitors such as Bitcoin and Ethereum. In December alone, Solana funds have seen the highest inflows in the cryptocurrency sector, totaling $14.1 million.

What is History of Solana(SOL)

Anatoly Yakovenko, a co-founder of Solana, brought forth his expertise in distributed systems design gained from notable companies like Qualcomm Incorporated (QCOM). His understanding emphasized the importance of a dependable clock in simplifying network synchronization. Yakovenko recognized that a well-synchronized network could potentially achieve exponential speed, limited only by its bandwidth.

Yakovenko’s insight led to the conception of proof-of-history, a mechanism he believed could significantly enhance the speed of blockchain networks compared to systems like Bitcoin and Ethereum, which lacked clocks. These existing systems faced challenges in scaling beyond 15 transactions per second (TPS) globally, a stark contrast to centralized payment systems like Visa, capable of handling peaks of up to 65,000 TPS.

By introducing proof-of-history, Yakovenko aimed to overcome this limitation, ensuring that every node within the network could rely on the accurately recorded progression of time.

The Concept of Proof-of-History

Anatoly Yakovenko introduced the proof-of-history (PoH) concept in a white paper published in November 2017. PoH operates by confirming time passage between events, encoding this timeline into a ledger to facilitate consensus within the blockchain.

Yakovenko highlighted that existing blockchains at that time didn’t rely on a standardized time source. Each node within the network operated on its own local clock, lacking synchronization with other participants. This absence of a universally trusted time reference led to discrepancies when using message timestamps for accepting or rejecting messages, as there was no assurance of uniform decision-making across the network.

Further Development

In 2018, Yakovenko assembled a team of five individuals to co-found a project initially named Loom. However, due to potential confusion with an Ethereum-based project sharing a similar name, they opted to rebrand it as “Solana,” inspired by a small coastal town near San Diego where the co-founders had previously resided.

The project underwent scaling in June 2018, transitioning to operate on cloud-based networks. Within a month, the team launched a public test net capable of supporting bursts of 250,000 transactions per second (TPS).

As of December 12, 2023, Solana had processed an impressive count of over 253 billion transactions, averaging a cost of $0.00025 per transaction. Additionally, Solana introduced its own token standard called SPL Token, resembling Ethereum’s ERC-20 standard for tokenization.


Anatoly Yakovenko’s PoH concept revolutionized blockchain technology by incorporating a mechanism that tracks time passage between events, enhancing consensus and addressing the lack of synchronized time across nodes in existing blockchains. This innovative approach aimed to ensure uniform decision-making based on a shared understanding of time, a crucial aspect in blockchain operations.

Following the conceptualization of PoH, the project, initially named Loom, evolved into Solana, scaling up its capabilities to operate on cloud-based networks and achieving a remarkable milestone of supporting 250,000 TPS in its public test net.

Solana’s impressive transaction volume and cost-efficient processing further cemented its position as a formidable player in the blockchain space, complemented by the introduction of its own token standard, SPL Token.

The Technology Behind SOLANA

Solana employs innovative algorithms within its design to eliminate the performance limitations typically associated with blockchain software. This strategic approach ensures scalability, security, and decentralization. The architecture of Solana theoretically enables a maximum throughput of 710,000 transactions per second (TPS) on a standard gigabit network and an impressive 28.4 million TPS on a 40 gigabit network.

The blockchain structure of Solana operates on a dual consensus mechanism consisting of proof-of-history (PoH) and proof-of-stake (PoS). In the PoS model, validators, responsible for validating transactions added to the blockchain ledger, verify transactions based on the number of coins or tokens they possess. On the other hand, PoH facilitates the rapid timestamping and verification of these transactions.

Solana distinguishes itself by utilizing validator clusters rather than individual validator nodes. These validator clusters involve collaborative efforts among groups of validators, working collectively to process transactions efficiently.

Solana’s technological framework prioritizes performance enhancement by implementing specialized algorithms, effectively addressing the traditional bottlenecks experienced in blockchain software. This strategic design ensures that the platform achieves scalability, robust security measures, and a decentralized ecosystem. The theoretical capabilities of Solana’s architecture highlight its potential to handle a substantial transaction load, capable of processing 710,000 TPS on a standard gigabit network and an exceptional 28.4 million TPS on a 40 gigabit network.

The blockchain model of Solana integrates two consensus mechanisms: proof-of-history (PoH) and proof-of-stake (PoS). PoS enables validators—individuals responsible for validating ledger transactions—to verify transactions based on their holdings of coins or tokens. Concurrently, PoH facilitates the rapid and accurate timestamping and verification of these transactions, contributing to the network’s efficiency.

An innovative feature of Solana’s architecture is the use of validator clusters instead of individual validator nodes. This approach involves collaborative clusters of validators working together, enhancing the network’s ability to process transactions more effectively and efficiently than traditional singular validator node systems.


Solana’s rapid growth and diverse functionalities have prompted comparisons with Ethereum, the primary blockchain platform for decentralized applications (dApps):

Smart Contracts: Both Solana and Ethereum support smart contracts, crucial for running sophisticated applications like decentralized finance (DeFi) and non-fungible tokens (NFTs).

Consensus Mechanism: Solana and Ethereum utilize a proof-of-stake (PoS) consensus mechanism where validators stake their crypto assets to validate transactions and receive rewards. Solana enhances PoS by incorporating proof-of-history (PoH) for improved efficiency.

Transaction Speed and Costs: A significant highlight of Solana, particularly in 2021, was its notable edge over Ethereum in transaction processing speed and costs. Solana achieves over 2,700 transactions per second (as of Dec. 12, 2023), with an average cost per transaction at $0.00025. In comparison, Ethereum’s transaction throughput is below 15 transactions per second, and average transaction fees hover around $2.62.

Solana and Ethereum share essential features such as smart contract capabilities that facilitate the execution of various advanced applications, including DeFi and NFTs. Both platforms offer an environment for developers to create decentralized solutions using these functionalities.

In terms of their consensus mechanisms, both Solana and Ethereum utilize a PoS model, where validators stake their cryptocurrency to validate transactions and earn rewards. However, Solana stands out by integrating PoH, enhancing the speed and efficiency of transaction validation compared to Ethereum’s PoS system.

One of Solana’s most notable advantages over Ethereum is its exceptional transaction processing speed and significantly lower transaction costs. Solana boasts a high throughput of over 2,700 transactions per second, a substantial increase compared to Ethereum’s limited capacity of fewer than 15 transactions per second. Additionally, Solana’s transactions cost a mere fraction at $0.00025 per transaction, while Ethereum’s fees tend to be significantly higher, averaging around $2.62.

These differences underscore Solana’s technological advancements, particularly in transaction speed and cost-efficiency, positioning it as a competitive alternative to Ethereum for various decentralized applications.

Ethereum holds an initial advantage as a pioneer in the blockchain space and boasts a vast ecosystem, ranking second only to Bitcoin in terms of market capitalization.

In 2022, Ethereum underwent a crucial upgrade that merged its Beacon Chain and Mainnet Chain, establishing a foundation for enhanced scalability, security, and sustainability within its blockchain. A forthcoming upgrade aims to introduce sharding, aiming to notably shorten transaction times and alleviate network congestion. How Solana will compete against these advancements remains uncertain.

Availability of Solana Token’s

Solana’s SOL token is divisible into smaller units called lamports, with each lamport valued at 0.000000001 SOL. These units pay homage to Leslie Lamport, a prominent computer scientist renowned for his contributions to distributed systems.

Currently, Solana boasts an unlimited supply of SOL tokens, with a circulating supply recorded at 426 million SOL as of December 12, 2023.

To Conclude

Solana stands as a blockchain platform that competes fiercely with, and potentially surpasses, Ethereum in terms of its intended goals, versatility in application, and technological capabilities. Renowned for its functionalities, Solana has gained substantial popularity within the blockchain sphere. Its native token, SOL, holds a significant portion of value within the cryptocurrency market, highlighting the platform’s strong presence and influence in the digital currency landscape.

Raghav Sawhney

Raghav is a significant contributer who uses his knowledge, skills and experience towards development & growth of the organisation in an efficient and effective manner.

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