Solana Rumored To Be Raising $450 Million To Build An Ethereum-Killer

Forbes

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Leading Ethereum challenger Solana could be making a big play to become the preferred blockchain for decentralized applications, such as DeFi and NFT offerings, if rumors of a funding round that could reach $450 million, prove to be true. We’ve heard from a Solana representative who didn’t confirm the rumors, but certainly didn’t deny them either. 

“This information wasn’t shared by our team, we’ve asked decrypt to redact but they have refused,” the spokesperson wrote. “We won’t be able to assist with any additional commentary around this as it’s not officially being released by Solana.”

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Solana had planned to close a smaller funding round in March, but expanded its plans after surging demand over the Spring as bitcoin reached its all-time-high price of $64,671. 

Solana is home to a host of decentralized products, including Serum, a decentralized exchange which has passed $4 billion in trading volume since its launch last August and was founded by multi-billionaire FTX founder Sam Bankman-Fried. Other users include Solible, an NFT marketplace and Atomic, a non-custodial crypto wallet. The fundraising rumors were originally reported by Decrypt.

According to the report, the money will be used to further develop the blockchain and gain market share. It could also be used to further fund and encourage developers to build on Solana rather than competitors, a necessary step for an emerging blockchain. In May, Solana devoted $20 million to support projects on the network through a partnership with MATH Global and raised $60 million to support projects in emerging markets in Brazil, Russia, India, and Ukraine. Then in June Solana launched another $20 million fund to further expansion in South Korea in partnership with ROK Capital. 

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Plagued with network congestion and high transaction fees, which reached an all-time-high of $70.8 in May, Ethereum has struggled to meet booming demand for DeFi products, most of which are hosted on the platform. Solana is capable of processing more that 1,000 transactions per second (TPS), while Ethereum handles about 14 TPS, according to data from blockchair. However, Etheruem could become more efficient after a critical update transitioning the blockchain to proof-of-stake from proof-of-work slated to go live in 2022. 

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To date, Solana has undergone five funding rounds, collecting a total of $21.8 million. If the rumored current round raises even $300 million that would place this round in the top six venture capital rounds in crypto and blockchain ever. 

Multicoin Capital was the lead investor in Solana’s early funding rounds and received the blockchain’s native token, SOL, in return for their investments. Other investors included Blocktower Capital, Blockchange Ventures, Reciprocal Ventures, Slow Ventures, Foundation Capital, Rockaway Ventures, Distributed Global, Kevin Rose, and Lyndon Rive. Forbes has been unable to confirm participants in this rumored round.  

Despite Solana’s rapid ascent, and growing war chest, it still faces considerable challenges. It is not the only prominent Ethereum would-be successor, as it must contend with Algorand, Cardano, Tezos, and Polkadot, among others. 

Additionally, this amount of funding, especially if issued in Solana’s native token (SOL), could draw attention from regulatory authorities such as the SEC who may believe the SOL tokens constitute securities. To date, the only pure crypto assets that have been deemed or believed to be non-securities by either the SEC or CFTC are bitcoin and ether. The SEC’s former Director of Corporate Finance, Garrick Hileman implied in 2018 comments that ether may have been a security in its early days before becoming sufficiently decentralized.

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The blockchain’s native token SOL has 477,855,617 tokens in circulation, available on two US exchanges, Binance.us and Coinbase pro. At the time of writing SOL is trading at $42.50.

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Author: Emily Mason, Contributor


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