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Grayscale report highlights potential Solana risks, should you be concerned? |

The report stated that Solana is “not merely a speculative investment” and should not be used as such. If you’re considering investing in the company, it’s important to take note of potential risks involved with their project.

The “sol shares outstanding” is a report that highlights the potential risks of using Solana. The report states that there are over 100,000,000 sol shares outstanding.

Grayscale report highlights potential Solana risks, should you be concerned? |


Grayscale, a cryptocurrency asset management firm, has produced “An Introduction to Solana,” a study. The business provides a thorough evaluation of the project, including its background, practical applications, and a summary of its possible hazards.

Solana – a 2021 success tale

Solana was ranked 112th on CoinMarketCap on January 3 with a market valuation of slightly under $101 million.

As its price started to rise, so did its market capitalization ranking. Solana was a top-20 token by August, and it wasn’t long before it climbed into the top-10 thanks to strong price growth.

Even after taking into consideration the latest drop, year-to-date gains total 8,700 percent. Furthermore, investors seem to be convinced on the project and what it intends to accomplish, considering its goal to be a better Ethereum.

The Solana network, according to Grayscale, is meant to provide developers access to a high-performance Web 3.0 cloud platform with Layer-1 scalability. It was created to compete with Ethereum by offering faster processing, cheaper costs, and more decentralization.

“From a political and geographic angle, it intends to reduce the complications of Ethereum’s Layer 2 solutions by optimizing for speed, cost, and decentralization.”

What are the possible dangers, and should you be worried?

Grayscale identifies five possible Solana hazards, some of which are generic and potentially apply to numerous cryptocurrency projects. Regulatory uncertainty, for example, notably the risk of being classified as a security by US authorities.

Grayscale, on the other hand, sees economics and valuation as a major stumbling block, claiming that the network’s fee income is still low when compared to Ethereum. Meaning, until network fees start to rise over time, the token’s value may not be in line with cash flows.

“The valuation may not be sustained purely on cash-flows value until fees rise through new apps, increasing use, or higher fees.”

The asset management business also has concerns about the project’s concentration. Similar assertions were made recently in the aftermath of a major outage that brought the network to a standstill on September 14.

This, according to Solana, was caused by a low-level bot assault that overwhelmed the network. The network was shut down as a result of the developers’ response, leading to assertions that Solana is completely centralized.

Finally, Grayscale raises the possibility of a problem with Solana’s Proof-of-History (PoH) consensus method. They claim that since the PoH consensus method is a new, untested technology, there may be undisclosed weaknesses that make it susceptible to assault.

“Proof of History is a computation sequence that may be used to cryptographically prove the passage of time between two occurrences.” It employs a cryptographically safe function that must be fully performed to create the result and cannot be guessed from the input.”

The tremendous growth of Solana in 2021 demonstrates that demand for Web 3.0 platforms is substantial. The most serious danger, though, is that investors are placing a lot of faith in unproven technologies.

Posted in: Adoption, Solana



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