Solana's SOL Rallies Over 100% in Past Month: What's Next?

Sales increased by over 100% in the last month indicating new money flowing into the Solana Blockchain and rising bullish expectations for the ecosystem among investors. Joining us now to discuss the renewed interest in the Blockchain of Slane Foundation, Head of Strategy, Austin Feda. Welcome to the show, Austin. Hey, thanks for having me on again. Thanks for being here. Now, from your perspective, what's behind this recent rally? Why? All the renewed excitement? Yeah, you know, price is something we don't really track or pay any attention to at the Slane Foundation, you know, markets move and they'll move many ways and you'll never really know why. But, you know, I think coming out of breakpoint and coming out of a lot of the developments we've seen across the ecosystem this year, folks are really noticing the sla of technology and how it's different than what other layer ones and layer two blockchains offer out there and that you can build stuff on sauna. You just can't practically build anywhere else in the market today. Uh And there's just been a ton of work that's been done over the last pretty much 18 months on underlying technology, both at the core contributors across the ecosystem and then on the application layer. And I think folks are really paying attention to what is now possible to build on SOLANA and what in fact has been built already on the network. So Austin, I know you can't talk about price, but this doesn't, this isn't quite about price. This is more about where the tokens are and, and uh and it has to do mostly with the FTX Alameda bankruptcy. And I if you can just clear it up for the folks at home who may not understand the idea that uh just because FTX and Alameda went bankrupt and we saw S Saman free freed, convicted of all sorts of fraud. It doesn't necessarily mean that all these tokens are gonna start flooding because they haven't vested yet. Correct. So I, I think this is something I if you could just kind of explain what is happening with those tokens. Yeah. So in the days after the collapse of FTX last year, the Solana Foundation put out a blog post that detailed token sales and lock schedules that it or Solana labs had made to FTX or FTX affiliated entities. So that information has sort of been in public for a year at this point plus all of the filings that have come out of the court proceedings and bankruptcy proceedings, the majority of those tokens have a multiyear lock attached to them. Uh that schedule again, like you can go look it up if you're curious. Um, and so, you know, as the bankruptcy process moves through, I don't, it's in no one's best interest, including creditors for any sort of tokens to be dumped onto the market. I think there was a lot of, sort of fud on Twitter, but these are professional people who are used to doing their job pretty well and, you know, crashing a market is not something that's in anyone's economic interest. Um Let alone the creditors who are the ultimate, uh you know, and, and the users who are the ultimate recipients of funds through this process. So I think we have to see how that process plays out over time. Um But there may have been just a lot of fear that there was something that was going to come up at trial or something along those lines and, you know, thankfully, I think for the good of the ecosystem, uh we are past the SPF involvement in any part of crypto, but more importantly, uh a lot of those tokens haven't, haven't gone to have invested if you will. Uh Oh, right. It's just a fraction of them have, so you have all these potential tokens out there, but they're years away from hitting the market if they can at all. So, is, is it possible, I guess FTX could or, or, or it's a successor organization could sell the rights to that and it still wouldn't necessarily affect the, the uh volume in the market. Is that correct? Yeah, I mean, I'm not a lawyer and I don't know what the tax implications there would be of selling locked tokens, but all locks are automatically reflected on chain. This is the great thing about blockchains is they are a public accounting and ledger database. Uh So folks can actually look up and, you know, run queries on, you know, any analytics provider to see what the locks are um for any tokens on the network. Um But yes, you know, uh if, if the court would allow it, uh you know, rights could certainly be transferred to future tokens without those ever hitting the public market much as someone might do in an OTC trade. All right, Austin, you brought up Solana's technology just a few minutes ago and Solana's value proposition is really that it's faster and cheaper than Ethereum, you know, some were calling it Ethereum killer during the last bull market now with the rise of layer twos and maybe some other scaling solutions to Ethereum. How is Lana thinking about remaining competitive here? I mean, Solana is still pushing four times the number of transactions per day, if not more than all layer twos combined. So when we're talking about the scale that something like Solana offers today, it's not really matched anywhere in those other ecosystems. And you know, their L twos and other L ones are functioning for different use cases. Um But you know what sla is really focused on is bringing the cost of transactions as low as possible with the highest throughput and the lowest finality. And so you can see something like the advancements in the fire dancer client, which is a new validator client coming to the Sauna network that is anywhere between 10 to 100 times more performant than the current validator client. And that's running on the same, you know, consumer hardware that folks are running validators on today. And so the focus at the foundation has really been to invest in these core technologies and these core teams that are going to make the network faster and cheaper to use over time. And that is the core differentiator of the sla a Blockchain. It's parallel, it's fast finality, it's high transaction throughput and it's really low cost to use. So, oh J go OK. I I want to talk about another thing that Solana became known for during the last uh bull market, which was NFTS. Of course, we're seeing NFT trading volume plummet, open seas largest marketplace on Ethereum devalued by one of their largest investors recently. Is NFT still a focus of the SLA ecosystem or I guess another way to ask this is what's the biggest innovation happening? Yeah. So the use cases of NFT SI think over the long term are not the use cases that we've seen over the last few years. I think the idea of artificial scarcity um for pieces of art has its use cases, but the real long term usage of NFTS is in a very different space. Right. Earlier this year on the sla a network, something called state compression, ch and state compression allowed people to mint 100 million NFTS for about $2000. That is pricing that you can't find anywhere else in the Blockchain ecosystem. And what that really allows people to do is use NFTS in totally new and different ways. So you see something like Drip House and what Drip house has done is they've taken the idea of scarcity NFTS and sort of remove that, but instead they are time boxed so you can only get them during a certain period of time. Um And so they're changing the relationship between a user and an NFT. You look at something like helium, which is a decentralized wireless network that recently completed a migration to Solana from their own Blockchain. They've represented every single hotspot and piece of infrastructure in that ecosystem as an NFT on chain. We're seeing folks begin to use Soul Bound NFTS which are NFTS that can't leave your wallet as its signifier of membership or that a user has passed a KYC test. And so I think the, the idea of a non fungible token is so much more powerful than just a picture of a JPEG. Uh And we're seeing people start to really use it in new and interesting ways including representing carbon credits and other real world assets on chain. And that's kind of where you know, to go back to that base layer technology that SOLANA runs on, you know, shipping innovations like state compression is designed to make the network step function changes cheaper to use. And we have no idea what folks are going to build when you do that. But every time you see costs go down by an order of magnitude, entirely new ecosystems come up and entirely new uses of technology. This was the transition from three G data to four G data and cell phones. This was dial up internet to DS L let alone the fiber we have today. And so all of these things just create new green fields for entrepreneurs to build incredible new applications. So uh you had, speaking of which you had this uh partnership with Visa uh announced in September to allow some stable coin transaction. Where, where is that right now? What's been built? Anything happening? Yeah. So Visa announced that they're going to start scaling their pilot project on Ethereum that they've had for a few years, which is using us DC to settle transactions instantly between some of their main accounts and the merchant bank level. And so, you know, Visa did an exhaustive due diligence process to figure out where they wanted to scale that, that program. And they ended up picking solana as the network to scale that on. Uh And so their engineers are building out systems to sort of keep that scaling process going. You know, eventually it moves further down the stack instead of just the visa main accounts talking to merchant banks, you eventually have merchant banks doing payouts to smaller banks. And eventually we might get to a future where, you know, you tap your Visa card in a store. And even if the consumer side is fully running on, you know, the credit card rails on the back end, the merchant is get paid six hours later in US DC, deposited in their account. Uh So I think over the long term, you'll see a lot of new interesting innovations be built on top of this. Uh you know, visa engineering is still kind of in the early days of, of this. Um But they've started rolling out transactions uh to the sla a network today today. Uh Well, they're operating on it now and not today. I was like, oh, wow. All right. We have the Visa partnership. I believe there is also Shopify partnership that was announced this year. What kinds of questions are these more uh traditional payments, traditional traditional finance companies asking when it comes to regulation? Are there any concerns or are they just kind of jumping into the, to the waters? I mean, these, these are all large financial companies that already know how to comply with things like money transfer licenses and any of those other requirements that might be placed on a payments network. So from their perspective, what they already do is usually sufficient for this sort of thing. If you sign up for a credit card, they already have all your information. If you are a visa merchant, they already have all of your information. Same with something like like Shopify. Uh you know, I think really what we're looking for in the United States specifically and it would be great to see other parts of the world adopt this too are clear definitions of what a payment stablecoin is about how this can be used. There's legislation that was moving through um you know, the US Congress uh this summer that would have classified and set aside a whole series of requirements for payment stablecoins. I think those are an important step to giving users and businesses the confidence they need to trust that a Stablecoin is actually sufficient. We went through this whole transition in moving from checks to credit cards because what is a dollar on the Visa network is that a Stablecoin? Is that a synthetic dollar? Right? There's all these rules and regulations around the reserves, these type of companies need to manage and it would be great to see a lot of that clarity come to the Blockchain space specifically with stablecoins. Uh We see merchants around the world really excited with the idea of instant settlement um and reducing fraud to effectively zero. these are, are things that I think are going to be really attractive to folks who are currently paying upwards of 2.85% to process credit card fees. So blame Congress. I mean, you know, I think the thing we see in the United States often is that there's no right way to do stuff in Blockchain. Right? And so the advantage of something like a comprehensive regulatory package on whether it's stablecoins or crypto in general is folks now have rules of the road, right? If you want to start a bank, there's a lot of paperwork and a lot of legal fees. But fundamentally, there's a, there's a game plan you can look at and say as long as I do this, I'm going to do right by the federal government in the State of New York today, those rules don't exist for Blockchain. It's actually very hard. Even if you spend millions of dollars on legal fees to know that when you start a crypto company in the United States, you're not going to be doing something that will later end you with a ton of fines and a ton more legal bills, you know, down the road. And so that is where, you know, us entrepreneurs are being pushed offshore, not because they don't want to comply, but because they literally don't know what they have to do to comply to build a great Blockchain company here in the United States. And that's a shame. Um You know, I think you can imagine if early entrepreneurs had been kicked offshore in the early days of the internet, we have a very different internet than we do today. One that would be much less free and, you know, much less uh embodying of sort of western values. All right, Austin, we are all out of time, so we're going to have to leave it there. But thanks so much for joining the show. It's always a pleasure having you on. Thanks. That was the foundation head of strategy, Austin Feda and make sure you sign up for the coin desk protocol newsletter which explores the tech behind crypto one block at a time. You can find that at coindesk dot com slash newsletters.