Recently, former Goldman Sachs executive Raoul Pal explained why he is so bullish on $SOL, the native token of the Solana blockchain.
Here is how Coinbase described Solana in a blog post published on 29 June 2022:
“Solana is a decentralized computing platform that uses SOL to pay for transactions. Solana aims to improve blockchain scalability by using a combination of proof of stake consensus and so-called proof of history. As a result, Solana claims to be able to support 50,000 transactions per second without sacrificing decentralization, and is one of the largest proof of stake blockchains by market cap.
“Solana aims to enable smart contracts to allow developers to build a wide range of decentralized finance (DeFi) apps, new crypto tokens, games, and more. When users stake their crypto, they make the underlying blockchain of that asset more secure and more efficient. And in exchange, they are rewarded with additional assets from the network, which are paid out as rewards.“
Prior to founding macro economic and investment strategy research service Global Macro Investor (GMI) in 2005, Pal co-managed the GLG Global Macro Fund in London for global asset management firm GLG Partners (which is now called “Man GLG”). Before that, Pal worked at Goldman Sachs, where he co-managed the European hedge fund sales business in Equities and Equity Derivatives. Currently, he is the CEO of finance and business video channel Real Vision, which he co-founded in 2014.
In the April 2020 issue of the GMI newsletter, Pal explained why he believes that Bitcoin, which he called “the future”, could one day have a $10 trillion valuation. In that issue, Pal said that the idea of a $10 trillion valuation for Bitcoin is not so crazy:
“After all, it isn’t just a currency or even a store of value. It is an entire trusted, verified, secure financial and accounting system of digital value that can never be created outside of the cryptographic algorithm… It is nothing short of the future of our entire medium of exchange system, and of money itself and the platform on which it operates.“
Since then, Pal has provided several updates on changes to his crypto holdings, and these days he seems a lot more bullish on Ethereum than Bitcoin. For example, on 29 October 2021, he tweeted:
As for the other layer one (L1) blockchains, based on the comments he made during an “Ask Me Anything” session streamed live on YouTube on September 9, the Ethereum rival he seems to be most bullish on is Solana.
According to a report by The Daily Hodl, Pal said:
“As adoption keeps building, a lot of adoption spills outside of ETH into the Solana, Avalanche, and a bunch of other protocols as well. So I think we’re going to see ETH lead the charge, and then we’ll see this tail of stuff starting to come as we start a new bull market and generally things work that way...
“I think a lot of these layer ones this time around will be like ETH in the last cycle. They’ll end up becoming very large dominant chains. Which ones? I don’t really know. My bet is really on Solana, but it could be any of these… Solana, I’ve got more allocated towards that, than I have some of the others, but I’m watching them and waiting to see.“
On 22 August 2022, during an interview with Real Vision, Anatoly Yakovenko, Co-Founder and CEO of Solana Labs, which develops the Solana blockchain, talked about the challenge of offering both high performance and high reliability.
According to a report by The Daily Hodl, Yakovenko told the Real Vision CEO:
“This is our biggest challenge, which is maybe one that I like to have because all these challenges are coming because we have users. And the chain is, on a daily basis, when you look at normal transactions from applications from users – just from people using the network – when you look at those, there’s about 30 million transactions per day. Our peak day was 65 million. That’s more than all the other chains combined.
“Binance Smartchain is one-tenth of that. I think Ethereum is one-thirtieth. And because of this load, we’ve seen things that we didn’t expect, and we were a bit short-sighted in the kinds of attacks people would throw at the network…
“I think some people have seen 10 million packets per second being submitted to a validator. And if there’s a bug in any one of those validators where memory grows really, really quickly or something we didn’t do well for that load, that validator could shut down, it could break, it could run out of memory, for whatever reason. If a third of them do that, then the network is basically stalled until some manual intervention brings it back up. That has happened a couple of times.“
The Solana Labs CEO also explained why Bitcoin is able to be more resilient than Solana:
“[Bitcoin] is designed to be extremely resilient, and some things that are normal for Bitcoin, like when a bunch of Chinese hash power shut down, there were times where there are two hours between blocks in Bitcoin. And that’s totally fine. If there’s two hours between blocks in Solana, the network’s dead because it’s designed to make a block every 400 milliseconds… Once you make a faster network, the failure case is different than one on something like Bitcoin or Ethereum.“