Crypto startup Solana Labs has announced that it has raised $314 million to build decentralised finance (DeFi) and the Web3 ecosystem.
The crypto token sale was led by Andressen Horowitz and Polychain Capital along with Alameda Research and 1 kx among others. It is believed that this investment would be used to encourage other startups to build on the Solana blockchain and also to have a fund that will invest into companies that build within the ecosystem, the company said.
This well and truly begins the competition between Solana and Ethereum to become the blockchain of choice for developers to build on. Though Ethereum is very well developed over the last few years and most of the apps and DeFi startups are building on Ethereum, its high fees and network congestion have been pointed out by its critics recently as something that kills innovation . Though the fees are expected to become lower when ETH 2.0 is fully launched and operational, it is understood that many developers and blockchain startups have already started looking at alternatives.
“We’ve been following Solana for a long time and believe it could massively scale the DeFi ecosystem,” said Olaf Carlson-Wee, Managing Partner at Polychain Capital. “In our view, Solana is a compliment to Ethereum, and we’re thrilled to see strong developer activity and a continually expanding community grow around the project.”
Investors and a growing community of developers believe that Solana could provide that alternative due to its lower fees and high transaction speed. The blockchain can process up to 50,000 transactions per second at this time and this is expected to improve as upgrades are made and as the ecosystem grows.
The fact that some major investors like Alameda Research (owners of the FTX exchange) are betting on Solana could ensure that it emerges as a serious contender for the development and the innovations that are currently happening on Ethereum. There are other alternatives to both these blockchains like the Flow blockchain but the market buzz hasn’t yet caught on for these blockchains as much as it has for Solana.
Already many DeFi teams have shown interest to build on Solana and the company has also been upgrading its blockchain to cater to this space. The DeFi space is expected to be the next frontier for development and innovation and there has been a lot of competition in this space to gain investor attention. It would be interesting to see how Solana develops in the coming years and whether it would continue to challenge Ethereum or whether it would lose steam in the long run.