The Strength Behind Solana: The Power of Belief, Ecosystem, and Chip Structure

Recently, the strong performance of Solana(SOL) has attracted widespread attention in the market. This article will explore the rise of SOL from several unique perspectives and analyze its future trends.

Faith comes from a decline, consensus comes from a rise.

Comparing the historical trends of Ethereum (ETH), we can find some interesting similarities. In the last bull market, ETH rose nearly 60 times from its lowest point. However, prior to that, ETH had fallen from its 2017 peak of $1440 to $81.79, a decline of 94%. Meanwhile, SOL dropped from $259.9 to $8, a staggering decline of 97%.

Such extreme market shocks often trigger large-scale sell-offs, almost forcing all investors to "start from scratch." Not only ETH and SOL, but Bitcoin has also experienced declines of over 90% multiple times. This process clears out floating chips, leaving behind steadfast holders.

As prices rebound and new assets are continuously created, external buying begins to enter the market, at which point the market will pay attention to changes in the fundamentals. There are two main types of people driving the price increase: first, existing holders continuously increasing their positions, and second, new entrants buying at support levels or in an upward trend. When all potential buyers have entered and hold for the long term, the market will enter a period of consolidation until the next key event occurs.

Creating new assets is key

Both rounds of bull markets for Ethereum were accompanied by asset expansion, such as the ICO boom and the DeFi boom, which locked in a large amount of liquidity. SOL also experienced a similar process: the explosion of BONK completed ecological prosperity, while the introduction of the Depin concept expanded the user base and created new assets.

The key to the success of public chains lies not in technological leadership or ecosystem completeness, but in the ability to create a profitable effect and a new narrative. In contrast, ETH's high Gas fees affect the efficiency of capital flow, coupled with the fact that many believers and potential buyers have basically entered the market (, and the chip structure under the PoS mechanism is stabilizing. We need to wait for the next key event ), such as a significant decrease in Gas fees or the approval of an ETF ( to attract new funds. However, considering ETH's massive belief foundation, once a key event is triggered, its explosive potential will be remarkable.

The Importance of Chip Structure Concentration

The market generally believes that a more uniform distribution of chips is better, and a highly concentrated distribution is a disadvantage. However, the reality may be quite the opposite. An overly average chip structure may lead to more game-theoretic factors that market participants need to consider, which could, in turn, hinder price increases.

The driving force behind the price increase is potential buying, rather than the distribution of chips held by current holders. With stable positions, it is easier for the price to form an upward trend. During the last bull market, there were also a large number of locked-up chips in Ethereum, such as ETH2.0 staking, Grayscale's one-way purchases, and DeFi locking, which locked up the vast majority of floating chips, thus supporting ETH's maximum increase of 60 times.

The current situation of SOL is similar to that of ETH. The FTX and Alameda wallets together hold approximately 55.8 million SOL, accounting for 13% of the total circulation. This highly concentrated chip structure may favor a strong performance of SOL in the short term. However, it is important to note that once this portion of chips returns to circulation, the market performance of SOL may be affected, which is similar to the situation ETH faced after the Shanghai upgrade.