Solana (SOL -1.19%) has minted a lot of millionaires since its launch in 2020. The cryptocurrency started trading at $0.95 and hit its all-time high of $260.06 on Nov. 6, 2021 -- which would have turned a $10,000 investment into $2.74 million.
Solana was widely seen as an alternative to Ethereum (ETH -0.15%) for the development of decentralized apps. Solana's blockchain was faster, more scalable, and had lower transaction costs than Ethereum. It accomplished that by using its unique proof-of-history (PoH) mechanism to accelerate the proof-of-stake (PoS) mining method used by Ethereum.
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However, a series of network congestion and security failures caused Solana to lose its luster, and rising rates subsequently crushed the cryptocurrency market. To make matters worse, failed crypto exchange FTX hastily liquidated its Solana tokens in several huge auctions to raise more cash to pay off its creditors. As a result, Solana's price dipped below $10 by the end of 2022.
Yet Solana bounced back, reaching $163; your original $10,000 investment would still be worth $1.72 million. It was tough for investors to stick with Solana through those wild swings, but it's now the world's fifth largest cryptocurrency with a market cap of $71 billion. Could it keep growing and turn a fresh $10,000 investment to $1 million again?
What's next for Solana?
Solana's powerful recovery suggests it will remain a formidable rival for Ethereum as a platform for the development of decentralized apps and tokens. Its network has already been used to produce a wide range of meme coins, including notable ones like BONK (BONK -2.47%) and WIF (WIF -3.78%), as well as decentralized exchanges like Jupiter and Orca. The expansion of that ecosystem could make it a fertile environment for more crypto projects.
New decentralized wallets and financial apps could also help Solana (and Ethereum) disrupt traditional financial institutions. The introduction of Solana Pay, which was integrated into Shopify last year, marked a major step in that direction. Visa also started to run its stablecoin settlement program on Solana, while Circle recently added native Solana support for its EURC stablecoin.
Solana Labs' subsidiary, Solana Mobile, even launched its own Saga smartphone last December. The Android device is still a niche gadget, but it targets Web3 enthusiasts with its integrated digital asset management and Solana blockchain tools.
Solana's rapid expansion is impressive, but Ethereum is scrambling to match Solana's speed and scalability with its own network upgrades. In a recent essay, Ethereum's co-founder and chief architect, Vitalik Buterin, proposed the introduction of "multidimensional gas fees" which sound similar to Solana's variable project-by-project user fees across its "local fee markets." If Ethereum closes that gap, it could throttle the long-term growth of Solana's blockchain ecosystem.
How much higher can Solana soar?
Solana seems to have overcome its initial growing pains. It resolved the congestion issues caused by the market's feverish interest in non-fungible tokens (NFTs) in 2021, survived FTX's large liquidations, and still processes transactions faster than Ethereum. Developers are still launching new apps on Solana and promoting their new tokens with airdrops.
However, it's tough to tell how much larger Solana's blockchain can grow as long as it's overshadowed by Ethereum's larger network. For now, CoinPedia estimates that Solana's price could hit $500 by the end of the year and $1,672 by 2030.
You should take those estimates with a grain of salt, but they imply that Solana will remain one of the world's top cryptocurrencies as it attracts more developers and becomes more widely adopted for mainstream payments. But even if Solana's price hits $1,672 by 2030, it would only turn a new $10,000 investment into about $100,000.
Therefore, Solana might still have a lot of upside potential -- but it probably won't make you a millionaire by the end of the decade. It could also easily be cut in half before it generates bigger gains, so investors should brace for a lot of volatility.
