On the final day of January, the founders of Solana (SOL 6.02%) published what can best be called a “State of the Union” update. It laid out Solana’s priorities for the year ahead, reiterated the key principles and values that are driving the development of the Solana blockchain, and highlighted a multitude of key projects that embody those principles and values. Perhaps most importantly of all, it offered a mea culpa for the events of last year.
If you’re a long-term investor, this update provides a valuable roadmap for where Solana is headed and why. From my perspective, Solana is now a screaming buy. Why? Because I now have a much better idea of how Solana plans to grow from an $8.7 billion market cap crypto to something much bigger.
Web3 and decentralization
One key focus of the update was Web3 and the new era of decentralization brought about by blockchain technology. In short, Web3 is the key to understanding the long-term value of Solana. As Solana explains, Web2 was the era of large, centralized platforms in Silicon Valley that currently control the internet. But Web3 will be a completely decentralized era in which users are in control. Users will be the true owners of the platforms and services they use, and that will generate growth opportunities for Solana.
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According to Solana, all of the advantages of its blockchain technology — such as incredible speeds, high throughput rates, and cheap transaction costs — will be leveraged to create these decentralized platforms and services. This will be tremendously disruptive, especially in financial services, where decentralized finance (DeFi) is already forcing the titans of Wall Street to change their business models.
Solana and Web3
Solana is already using Web3 to reimagine the way things work now, including mobile networks, financial services, and even publishing and ridesharing platforms. When you are able to decentralize a platform, you are able to remove all the middlemen and intermediaries that make it expensive or slow it down. For example, Solana is making possible new payment protocols for regular, everyday users to avoid the high fees of traditional payment providers. For anyone who thinks that Solana is only about non-fungible tokens (NFTs) or blockchain gaming, this should open some eyes.
Another thing that impressed me was how much this Solana roadmap for the future differs from Ethereum‘s (ETH 1.81%). While Ethereum co-founder Vitalik Buterin has eloquently described where he sees the blockchain headed, much of what Ethereum reveals to the public as part of its future roadmap is very wonky, technical, and overly complex. The Ethereum roadmap from November, for example, involved six distinct stages and lots of complex terms that are unfamiliar even to crypto enthusiasts.
I much prefer the approach of Solana, which gives me the names of specific projects and apps to check out so that I can see for myself what they’re building. This strikes me as being similar to the moment in the State of the Union address when the president asks business owners, hometown heroes, and noteworthy individuals to stand up and be recognized for embodying what’s right about the nation. It’s important to understand what a blockchain is building in real life to see why it matters.
Solana’s long-term vision
Solana is doubling down on the strategy that it has had ever since publishing its original white paper. It’s not doing a pivot, or changing its approach, or abandoning any of its key principles and values as a result of last year’s FTX debacle. This gives me more confidence that Solana is built for the long haul.
Of course, skeptics will note that people have been talking about Web3 for nearly a decade now, and still nobody can agree on what it really means. Other skeptics will say that Solana is so impaired as a result of its toxic relationship with FTX that it will have a hard time coming back. But, as Solana’s founders point out, the reason the FTX meltdown happened is because the crypto industry didn’t go far enough in its embrace of Web3 principles and values. FTX was too centralized, and that’s why it failed.
Solana appears to be building a stable foundation for future long-term success. The vision is not just to have a cheap, fast blockchain, or to mint more NFTs than the next guy. The vision is much bigger than that — it’s to make blockchain and crypto accessible to all, and change the way nearly every industry does business. Solana says it plans to onboard a generation of new users to the Web3 future. That speaks to the long-term growth potential of Solana, and underscores why it’s a screaming buy right now.