[The Motley Fool, Getty]
Solana and Aave could supercharge your portfolio.
- Solana may be the fastest blockchain available.
- Aave is a great way to bet on decentralized finance.
Want to earn multibagger returns? Look no further than cryptocurrency. While crypto prices have been in a slump so far this year, they look poised to rebound amid soaring inflation and macroeconomic uncertainty around the globe.
Let’s explore why Solana (CRYPTO:SOL) and Aave (CRYPTO:AAVE) are great ways to bet on this opportunity.
No one knows when crypto’s current bear market will end, so investors should bet on assets with the potential to outperform in the rebound. Solana’s massive technical advantages could help it capture market share from rivals, and it looks poised for a bull run when sentiment improves.
With a transaction capacity of 50,000 per second, Solana is significantly faster than its larger counterparts Ethereum and Cardano (which handle 15 and 250 transactions per second, respectively). It also holds its own against mainstream payment networks like Visa, which has a capacity of more than 24,000 transactions per second.
Why is Solana so blazingly fast? The answer lies in its unique consensus mechanism.
The network combines a Proof of Stake (PoS) system (where miners verify transactions using coins they own) with a complementary algorithm called Proof of History (PoH). According to Solana’s website, PoH speed ups its block validation process by recording time, reducing the amount of work miners have to do.
Solana’s technical prowess makes it an attractive platform for decentralized applications (dApps), which are blockchain-based programs that enable more-sophisticated uses like cryptocurrency exchanges and digital art markets.
Unlike stand-alone blockchains like Solana, Aave is a token programmed on the Ethereum network. The platform focuses on decentralized finance, making it an excellent way for investors to bet on the potential real-world utility of blockchain technology.
While Aave functions strictly online, it helps alleviate the real-world lack of options for investors seeking to earn income in a low-interest rate environment. The platform allows users to lend digital assets through liquidity pools in return for interest that varies based on demand.
Users can also temporarily “cash out” by using their crypto as collateral for a loan, which can be converted to fiat currency without having to sell the original position. This could be useful for investors who need cash but don’t want to miss out on the potential appreciation of their crypto holdings.
As an Ethereum-based platform, Aave faces that network’s limitations, like slow transaction speed and congestion. But Ethereum’s developers plan to fix its scalability problems through an update called Ethereum 2.0, designed to shift its blockchain from proof of work (where miners solve puzzles to verify transactions) to proof of stake. It is unclear when these changes will go live.
Focusing on fundamentals
Cryptocurrency is still a largely speculative investment class. But assets like Solana and Aave can help push blockchain technology further into the mainstream with their technical advantages and value-adding uses. These strong fundamentals can help sustain long-term growth in 2022 and beyond.
By Will Ebiefung