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Solana (SOL-X) became a market darling almost as soon as it launched in late 2017. Its blistering transaction speed quickly earned it the title of "Ethereum Killer" — a nickname that soon caused strife between Ethereum enthusiasts and the new Solana community. Ethereum holders who staunchly defend their choice of crypto are not entirely wrong. While Solana creates solutions to several challenging issues in the crypto ecosystem, it is not without shortcomings.

The blockchain's evolution gives rise to Solana 

The first digital currency on the blockchain was bitcoin and other simple alt-coins. This first-generation blockchain served only as cryptocurrency and a shared public ledger to record transactions digitally. 

For years, Bitcoin reigned supreme with other cryptocurrencies merely cloning the concept behind its code. As time went on, however, developers began to believe the blockchain was capable of more. Enter Ethereum, a newcomer to the blockchain running sophisticated computer programs called smart contracts.  

This second-generation blockchain created not only a digital currency, but a digital economy. It extended blockchain 1.0's capabilities into privacy, smart contracts, and non-native asset blockchain tokens. This expansion opened new markets and revolutionized the landscape. Second-gen cryptocurrency could do much more than record basic transactions; this crypto was sophisticated computer programs stored on the blockchain. 

The third-generation blockchain expands on the capabilities of blockchain 2.0, and sets the stage for a digital society with utility tokens and smart contract platforms. On its heels, a fourth-gen blockchain ecosystem provides an open design that resolves limitations on operational speed, expands practical applications, and slashes the older blockchain's vast requirements for energy consumption.

Just how fast is Solana?

Solana was created in 2017 by Anatoly Yakovenko, a former Dropbox and Qualcomm programmer, with Greg Fitzgerald and Eric Williams. What distinguishes Solana is its Delegated-Proof-of-Stake (DPoS) consensus method. DPoS blockchains are far faster than Proof-of-Stake (PoS) blockchains. 

To put things in perspective, Bitcoin generates new blocks in an estimated 10 minutes, and Ethereum cuts that down to between 10 and 19 seconds. Solana's block time, however, is an average of 2.34 seconds. 

This efficiency enables Solana to handle 50,000+ transactions per second (TPS) without sharding. As per the Solana Docs, Solana is set to theoretically scale to 710,000 TPS at 1 Gigabit. By comparison, slower and older blockchains such as Ethereum, Bitcoin, and Litecoin handle 7 TPS, 25 TPS, and 56 TPS, respectively. Solana's current TPS statistics are comparable to centralized platforms such as Visa. 

Solana's transaction speed demonstrates the efficacy of its Proof of History consensus process, and explains the increase of decentralized applications and NFT projects being deployed on its network. Ethereum's dominance as the home of DeFi and NFT has waned dramatically in recent months due to the increased number of projects being deployed on faster blockchain networks like Solana.

The controversy surrounding decentralization slows Solana's rise to success

Solana's network offers compelling advantages, but controversy is bogging down the blockchain's once rapid rise. Today, the so-called Ethereum Killer is a mere shadow of itself. Both its market price and value proposition have deflated in the eyes of the crypto community. 

Though the crypto market is constantly changing, one of its cardinal principles is the pilar of decentralization. Centralized markets employ middlemen during transactions, while decentralized markets allow investors to deal directly with each other. Bitcoin was created at the tail-end of the financial collapse of 2008 with a purpose born of the need for money that no single entity could control or inflate.  

Despite the crypto community's moral obligation to protect a decentralized blockchain, Solana's ownership continues to make decisions that fly in the face of this founding philosophy. Case in point, Solana holds most of its SOL tokens for its own private and public token allocations. According to data from Messari released in May 2021, 50% of SOL tokens are held by Solana's Venture Capital investors, developers, and the Solana Labs Company. As a result, it is safe to say that Solana is privately owned, despite being a public blockchain. 

This centralization of SOL tokens creates an existential crisis for Solana's supporters. While some argue a trade-off in principles for a faster and more secure blockchain is worth the price, many disagree. 

Nodes act to verify each transaction's authenticity on a blockchain. While Ethereum has 2,471 node validators, Solana only has 1,447, amounting to 70% fewer. A total of 19 nodes in Solana's network control over a third of its total stake, and validate over a third of its transactions. Fewer verifications allow Solana's network to be faster than Ethereum, but control remains in the hands of a select few.

Calling Solana's leadership to the carpet 

In November 2021, Justin Bons, founder and chief investment officer of crypto fund management Cyber Capital, sent a series of tweets criticizing Solana for a "long series of lies, fraud, and deception." While Solana's leadership claimed to be circulating only 8.2 million tokens, it loaned an additional 13 million to a market maker without informing the community.

Solana's founder responded by saying those tokens were provided to the market maker to create liquidity in the aftermarket. Regardless of whether or not the decision was justified, the crypto community saw the lack of transparency as an act of betrayal, and SOL's price has continued to nosedive ever since.

Plummeting popularity plagues Solana with problems 

The recent crypto market crash has plunged a long knife into the heart of Solana. The once-promising blockchain has dropped to two-thirds of its value. In November 2021, Solana was selling for $260, but as of March 2022, it is trading for roughly $86.50. An almost 70% loss in value is not something investors can ignore, and the token's market rank has fallen from fifth to ninth in recent months. 

Analysts suggest Solana's falling prices can be linked to the recent rash of frequent interruptions to its network. Over the past few months, attackers have repeatedly gained entry into the centralized platform and overloaded its memory capacity with a flood of scam transactions. The Solana network has gone down three times since September 2021, with one outage lasting over 17 hours. 

The most recent outage came as Solana was hit by a Distributed Denial-of-Service (DDoS) attack on January 4, 2022. This time, spam rendered the network inactive for five hours.

Given the increase in its usage and price, the number of outages is not phasing many investors. On the other hand, Skeptics are concerned that Solana is not sufficiently decentralized, as a tiny number of engineers have the power to unilaterally shut down its entire network.

Can Solana move forward?

Solana's founder is attempting to calm the community. He said on Reddit that, "if it takes two years to build, it will take two years to stabilize." 

While the remarks of Solana's founder may sound reasonable, the centralized approach he adheres to endangers the blockchain's future. A centralized approach creates a profoundly negative user experience for the community, and it's the community whose money is at stake. 

The claim that Solana is an Ethereum Killer falls flat, in that the Ethereum network has never been down as a whole network. This lack of decentralization will only continue to attract hackers who take advantage of its single point of failure. 

Solana offers the crypto market a fast, scalable blockchain solution with TPS speeds that triumph over other blockchains, but speed isn't all that a blockchain needs. The foundation of cryptocurrency requires that the network hosting that currency be decentralized. 

Strategically, Solana would be extremely shortsighted to ignore the community's calls for a more stable and decentralized network. The network is still in its early stages, but the only thing that can propel it to its full potential is a move to decentralize. As of now, SOL's leadership has yet to listen and implement the community's wishes. I recommend keeping purchases of Solana below 1% of your overall portfolio until they work through the kinks.