The crypto summer of 2020/21 saw most alternative Layer 1 protocols skyrocket to insane valuations and many projects in their respective ecosystems. This period became known to the wider industry as ‘DeFi Summer.’ With stimulus checks being handed out across the West and the looming uncertainty over the lifting of COVID lockdowns,  the economic issues of the time spurred a tornado of wealth with seemingly exponential potential/possibility.

Lasting until May of 2021, this 6-month period of prosperity was followed by a long bear market, which could now be nearing its end, as suggested by recent market activity.

This has spurred rumors across the crypto sphere of a DeFi Summer 2.0. Several factors, including a recent surge in TVL,  point towards this cycle starting not on Ethereum but on the Solana blockchain instead – what started these whispers, and what are the chances of follow through?’

Overcoming Ethereum’s Hurdles: The Democratisation of DeFi Onboarding

Persistent negative factors surrounding Ethereum are perhaps the strongest signs of a Solana-led DeFi Summer being on its way. The Ethereum chain has ongoing problems with high activity resulting in bloated gas fees and prices, which deter many people away from using it. This particular issue was evident during the last DeFi Summer. Solutions have arisen to help fix this problem since in the form of Layer 2s (Arbitrum, Optimism, Loopring, Base, ZkSync + others).

The economic hurdle presented by Ethereum’s high usage costs, combined with the complex nature of understanding and utilizing Layer 2 solutions, makes Ethereum less accessible to the average person. In contrast, Solana offers a lower-cost, more user-friendly platform for crypto engagement.

Solana is an Ethereum-adjacent blockchain that defines itself in terms of its focus on ease of use for new consumers and potential for mass adoption.

Solana’s ‘native’ crypto wallet is Phantom, an intuitive, easy-to-use wallet also available on mobile. Within Phantom, users can store coins, and NFTs and natively stake the Solana token. Phantom is synonymous with Solana in the way that MetaMask is with Ethereum, the flagship wallet of the blockchain. Phantom grew from 40,000 users to 1.8 million in July-Dec 2021, which has since doubled to 3 million users, setting its sights on an end goal of 10 million weekly active users.

With crypto adoption traditionally being hindered by difficult setup and onboarding processes due to the complexity of wallets and security, the UI/UX of Phantom allows newcomers to learn the ins and outs of crypto with ease and quickly begin their journey in the Solana ecosystem.

Owning 1 SOL vs Owning 1 ETH

Another advantage of Solana is the SOL cryptocurrency itself: $SOL currently sits at $57. Owning 1 Solana is attainable for most people, while owning 1 Ethereum is not. This removes a huge psychological price barrier for a new on-chain user.

If an amateur crypto investor sees that they can begin experimenting with $50 and become accustomed to low gas fees, fast transaction speeds, and the ability to bounce between protocols without hesitation, then transferring to Ethereum would seem alien

Both blockchains will, of course, co-exist; however, considering Ethereum’s current status (not including layer 2s and future upgrades), most people cannot afford $30 to make 1 transaction out of their first $100 to test out crypto.

Paying $0.0003 in fees to move the same $100 will hold wider appeal.

Is Solana ready for a DeFi boom?

Data from DeFiLlama reveals that during the height of the DeFi Summer, Solana achieved a Total Value Locked (TVL) of $9.9 billion from 55.1 million transactions, accomplishing this with significantly less infrastructure than it has now.

The recent and anticipated airdrops from various Solana projects have shifted focus toward the platform. As more people enter the world of crypto, Solana is increasingly becoming their first choice owing to its affordability, speed, and user-friendliness, a deal sweetened by the prospect of receiving airdrops. With free tokens offered by an accessible platform, why would new users need to look elsewhere?

Potential airdrops are another incentive that will attract users to Solana. While most of Ethereum’s major DApps have already conducted airdrops, only a few of Solana’s dapps have done so.

While market conditions are improving daily, signaling a potential bull market on the horizon, these platforms will expand and attract more capital. This should, in turn, lead to more frequent airdrops. Consider a scenario where person A informs person B about receiving easy value from an airdrop in the crypto world. Naturally, person B will have their curiosity piqued and will likely emulate person A’s actions in the hope of benefiting from such opportunities. Such chain reactions will be easily facilitated by Solana.

The chain’s infrastructure has advanced significantly, expanding the surrounding community rapidly. The success of the recent Breakpoint conference at such a critical juncture positions Solana at the forefront of these exciting developments.

Conclusion

While it seems likely that Solana may spearhead a potential DeFi Summer 2.0, it’s important to note that the chain itself won’t be the sole catalyst, nor will it render Ethereum obsolete. It is the insight surrounding Solana’s user-friendly and cost-effective features that mark it as the leading cryptocurrency for industry newcomers.

As more people engage, incentives will increase, leading to higher transaction volumes and a self-sustaining cycle of growth in motion. We can anticipate projects bridging over further expansion and a renewed opportunity for decentralized financial freedom.

Should these developments align, the coincidence of a Solana-driven DeFi Summer with the summer of 2024 could be a truly exhilarating experience.

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• Source: https://cryptoslate.com/op-ed-are-we-heading-for-a-solana-defi-summer/