Benzinga - Solana (CRYPTO: SOL), like other cryptocurrencies, experienced the fallout in the crypto markets in 2022.
But its technical fundamentals remained strong despite the collapse of FTX, which had an inordinate impact on the blockchain's ecosystem, according to a recent research report by Coinbase.
What Happened: The Solana community was just as surprised as the broader market by the collapse of FTX, given the network's historical relationship with the now-defunct exchange.
Nevertheless, Solana's founder Anatoly Yakovenko believed the blockchain's "perceived linkages" with FTX had historically been overstated.
From a technical perspective, the fundamental value proposition of the Solana protocol remained intact.
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Solana is optimized for high throughput, de minimis costs and native scalability, making it a "legitimately differentiated approach within the layer 1 landscape," according to Coinbase analyst Brian Cubellis.
Solana is well positioned to reassert itself as a genuine layer 1 competitor, given the ecosystem's relative strength in terms of network activity with regard to transactions, users, and development.
Why It Matters: Solana's activity on these fronts is favorable compared to Ethereum (CRYPTO: ETH), suggesting the Solana token may be undervalued relative to Ethereum.
The report also noted Solana's market capitalization was only around 4.3% of Ethereum's, while the amount of daily active users on the blockchain represents around 43.7% of Ethereum's daily active user base.
Additionally, Solana processes around 17 times the number of daily transactions processed by Ethereum.
As the cryptocurrency market continues to evolve, Solana's value proposition as a blockchain could become increasingly valuable.
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