Solana (SOL), the self-proclaimed “fastest blockchain in the world,” is making headlines for its incredible transaction speeds and rising token price. But is it all sunshine and rainbows in Solana’s land, or are there cracks in the seemingly velvety road?

Solana takes the TPS crown

According to CoinGecko data, Solana has outperformed competitors such as Polygon and Ethereum in transactions per second (TPS). This translates into faster transaction processing times, which is a key factor for scalability and mass adoption in the blockchain world.

However, a closer look reveals a more elaborate picture. While daily energetic addresses, which represent unique users interacting with the network, have indeed increased, daily transaction volume has not kept pace.

This suggests a scenario where more users enter the Solana ecosystem, but they do not necessarily transact at high volume. Is this a case of random cryptocurrency tourists dipping their toes in, or is there something else at play?

Fees are falling, but is this a lasting decline?

Another captivating discrepancy is the decrease in transaction fees on Solana. This may seem like good news for users, but it can be a double-edged sword. Lower fees may indicate that the transactions being processed are less elaborate and require lower fees.

This could potentially limit Solana’s revenue generation in the long term. Additionally, the drop in fees may signal a reduction in network congestion, which could explain the stagnation in daily transaction volume.

DeFi keeps the party going, but caution is flashing

A brilliant spot for Solana is the continued growth of its Total Value Locked (TVL) decentralized finance (DeFi). DeFi refers to a suite of financial services built on blockchains, and TVL represents the total value of crypto assets deposited in DeFi protocols.

Solana’s growing TVL numbers indicate its growing exploit in the DeFi space, where users can lock their cryptocurrencies to earn interest or participate in other financial activities. This is a positive sign for the overall health of the Solana ecosystem.

However, technical indicators such as the Money Flow Index (MFI) suggest some caution. This indicator suggests a potential correction in the SOL price, suggesting that the current uptrend may not be fully sustainable.

Combined with mixed signals about the network’s operations and a failing fee structure, investors are left with questions about Solana’s long-term prospects.

Blockchain is in high gear, but its purpose is unclear

Solana’s impressive transaction speeds and powerful DeFi presence are undeniable strengths. However, the network’s overall operations and tokenomics raise questions about its long-term viability.

Meanwhile, at the time of writing, SOL is trading at $185, up 7.1% and 26.0% on daily and weekly time frames, according to Coingecko data. This price escalate, combined with the breakneck speed of online transactions, paints a picture of a project with enormous potential.

But for Solana to truly become a dominant force, it will need to address issues related to network operations and long-term sustainability, not to mention raising the price of fuel.

Featured image from F1, chart from TradingView