2 Key Catalysts That Will Drive Solana Prices Higher in 2022

Solana continues to expand its robust ecosystem, making the cryptocurrency a top bet for long-term investors.

| More on:
grow dividends

Image source: Getty Images

The cryptocurrency selloff has dragged prices of several digital tokens lower. One of the top-performing cryptocurrencies in 2021 was Solana (CRYPTO:SOL), which gained over 10,000% in the last year. Right now, it’s down 60% from all-time highs, making it attractive to contrarian investors.

Despite the pullback, Solana is valued at a market cap of US$31 billion, making it the seventh-largest cryptocurrency in the world. We know that Solana gained momentum in 2021 due to its low transaction fees and scalability. The Solana blockchain network has already processed billions of transactions to date at a fraction of a cost compared to peer networks such as Bitcoin and Ethereum. Further, Solana has a throughput speed of 50,000 transactions per second, enabling it to onboard a number of projects on its network.

Here, we’ll look at two recent developments that will positively impact Solana prices in 2022.

The launch of Solana Pay

Solana recently launched Solana Pay, which is a payments protocol that aims to create the building blocks for a “decentralized, open, and truly peer-to-peer payment protocol.” This, in turn, will accelerate the adoption of digital currencies, where digital money will move through the internet, similar to data. The idea behind Solana Pay is that payment and technology will create a robust peer-to-peer communication channel between the consumer and retailer.

The payments protocol will allow consumers to send digital dollar currencies, such as the USDC from their wallet to the merchant’s account at a very low cost. While merchants have always wanted to increase customer engagement over time, the involvement of multiple intermediaries across channels has made the process difficult.

Now, with Solana Pay merchants can send digital assets back to the customer which will open up a wide range of capabilities that were not possible before. Basically, a merchant can reward customers with personalized offers, on-chain loyalty programs as well as virtual goods.

However, merchants will benefit from multiple advantages provided by on-chain decentralized payments that include network cost savings, zero fraud liability, instant settlement, and DeFi yield generation.

Solana-based tokens listed on Coinbase

Earlier this week, one of the world’s largest cryptocurrency exchanges, Coinbase disclosed it has begun accepting inbound transfers for Bonafida and Orca, two Solana-based tokens. Coinbase has already listed a number of ERC-20 tokens, which are layer 1 coins built on the Ethereum blockchain.

The two tokens, Orca and Bonafida, are DEXs, or decentralized exchanges, for Solana-based assets that include wrapped tokens. Similar to a stable coin, a wrapped token is a cryptocurrency pegged to the value of another digital token.

The recent developments have meant the SOL token is now up close to 12% in the last seven days. Cryptocurrency bulls expect Solana to become a leader in real-world payments with Solana Pay. Further, the listing of the above-mentioned tokens should enhance Solana’s status as a large-scale ecosystem in the blockchain system, driving prices of SOL higher over the long term.

While I’m bullish on Solana, investors should note that the volatility associated with cryptocurrencies might drive prices lower as well. So, you need to have a high-risk appetite to invest in this highly disruptive space.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin and Ethereum. The Motley Fool recommends Coinbase Global, Inc.

More on Investing

sale discount best price
Energy Stocks

Time to Pounce: 1 Phenomenal TSX Stock That Hasn’t Been This Cheap in a While

Now could be the time to get into Cameco (TSX:CCO) stock, which is up 81% in the last year but…

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

3 Millionaire-Maker Tech Stocks That Should Be on Your Radar

These three tech stocks have already proven themselves worthy, but have a lot more to prove in the near future.…

Read more »

A close up image of Canadian $20 Dollar bills
Tech Stocks

3 No-Brainer Stocks to Buy With $20 Right Now

These three stocks are easy buys for those who don't have all that much to spend, and want long-term growth…

Read more »

calculate and analyze stock
Dividend Stocks

4 Fabulous Dividend Stocks to Buy in July

Are you looking for long-term income? These four dividend stocks should not only provide you with value in July but…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Stocks for Beginners

The Top 3 Long-Term TSX Growth Stocks to Buy Today

These three growth stocks might be some of the best-performing stocks of the last year, but according to analysts so…

Read more »

financial freedom sign
Dividend Stocks

5 Steps to Financial Freedom for Canadian Millennials

Follow these steps and nothing can stop Canadian millennials from achieving their early retirement dreams.

Read more »

top TSX stocks to buy

3 Top Canadian Growth Stocks That Could Make You Rich in 10 Years

Given their healthy growth prospects and attractive valuation, these three growth stocks could create superior wealth in the next 10…

Read more »

edit Sale sign, value, discount

Couche-Tard Stock is a Tremendous Bargain Today

Alimentation Couche-Tard (TSX:ATD) stock looks like a great bargain ahead of its coming earnings report.

Read more »