Solana is raising $ 450 million to challenge Ethereum and is the least affected by the recent crash

Blockchain newcomer Solana, dubbed a “potential Ethereum killer” by some, is raising huge sums of money to boost its ambitions, including becoming a top application target.

Solana raises between $ 300 million and $ 450 million, according to multiple sources from several unnamed people. While exact numbers are not available, it turns out that the company had intended to complete a smaller round of fundraising in March but later expanded its reach to meet the high demand.

Last year FTX launched a decentralized version of the exchange on Solana. CEO Sam Bankman-Fried said:

“I am excited and impressed to see the recent growth in Solana’s business. They have had industry leading technology for a while and it’s nice to see reality catch up. “

Solana declined to comment on the fundraising news, but executives did not deny it in a recent interview.

As for the idea of ​​the “Ethereum Killer,” many other blockchains have also received the nickname, and most of them have been buried for a long time. Ethereum is by far the most popular blockchain for third-party projects – and Solana herself is trying to take a piece of the pie from there.

Not only does Solana appear to be positioned as the leading challenger to Ethereum in the fast-growing world of decentralized applications that revolve primarily around finance, but it will also encompass gaming, gaming and communications.

According to the promoters, the main advantage of Solana is that it is faster and cheaper than Ethereum. The project is expected to have a maximum throughput of more than 50,000 transactions per second. Ethereum averages 10 to 15 transactions per second.

Solana’s design is now a PoS blockchain. In other words, transactions only cost a few cents, a stark contrast to Ethereum with its excessive fees and sometimes hundreds of dollars for users to process. However, Ethereum’s fees are expected to drop significantly as the blockchain also moves to a PoS model.

Founded in 2017, Solana is also active in creating tools and networks that others can build on. For example, Solana supports a new protocol called Metaplex, which launched this week and billed as “Shopify for NFTs” – allowing creators like Grammy-winning musician RAC to create their own stores to sell unique digital items to sell.

Besides, Cost $ 22 1 year ago.

Prior to the current financing round, Solana had raised $ 21.8 million, according to Crunchbase. This includes a $ 20 million Series A led by Multicoin Capital in 2019 while being backed by BlockTower Capital and others. The CEO of Multicoin declined to comment on the current round, while BlockTower did not respond to a request for comment.

The research company Messari has published a report on the performance of 5 sectors in the crypto industry after the recent crash. The report written by Roberto Talamas finds that smart contracts (Solana, Cosmos, Polkadot, Kusama, etc.) are the least affected by this event.

The constant selling pressure caused the most important cryptocurrencies to correct by more than 50% in mid-May, and on June 3 the market closed positive for the first time since then. As Talamas noted, the smart contracts sector has a total return of 3.11% on assets like SOL, DOT, ATOM, KSM, CKB.

Performance analysis of the field | Source: Messari

As can be seen in the graph, DeFi projects and decentralized exchanges are equally profitable at 2.7%, followed by cryptocurrencies and the least profitable are Web3 applications. Overall, the researcher said that market activity was “a little bumpy” for the week of June 3. He added:

“Asset prices fell across the board during the week, causing losses of 10-25%. From May 30th, portfolio gains will find their feet, as rising prices regain part of the performance from the beginning of the week. “

SOL and cryptocurrency market affected by high volatility

As the week progressed, Talamas noticed a V-shaped pattern across the sectors it studied, suggesting a possible rebound. However, DeFi and Web3 began to underperform over the weekend and suffered moderate losses.

LINK, UNI, AAVE are the assets with the worst performance in the Web3 and DeFi sector. UNI and AAVE lost around 3.5 and 4.7%, respectively, while LINK lost 6% over the same period.

Cumulative earnings – performance of sectors | Source: Messari

This indicates increased volatility. On this subject, Talamas commented:

“The volatilities are still escalating in all sector portfolios after an increase due to the market crash in mid-May. Before the crash, the volatility was roughly the same in all sectors, mostly between 3-6%. After the crash, the volatility is widely spread.”

As the volatility increases, so does the correlation between the SOL and all assets. This indicator reaches 85% and 95% for certain couples.

As can be seen below, the correlation with the dominant market value Bitcoin is steadily increasing. Talamas points out this trend from the beginning of May, when several cryptocurrencies recorded losses.

The DeFi and DEX regions have the greatest correlation with Bitcoin. Among them, Solana and the smart contract platform had the lowest correlation, up 20% last month. In addition, the Talamas also noted the following:

“The correlation between Ethereum and all industry portfolios is currently at or above 90%. In addition to the massive allocation portfolios for Ethereum (top asset and smart contract platforms), the DeFi and DEX portfolios are those with the highest correlation coefficients with 94% and 93%, respectively.

30-day correlation with Bitcoin | Source: Messari

At the time of writing, SOL is trading at $ 42.2, up nearly 14% in 24 hours and 45% in 7 days, just 28% below ATH when it traded at $ 58 on May 18. SOL’s rebound appears to be showing confidence and could quickly revert to previous highs if the trend continues.

SOL price chart for the last 7 days | Source: Coinecko

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