Today it is my task to discuss Star lumens (CCC:XLM-USD), the one-time cryptocurrency powerhouse that has apparently become irrelevant to investors over the summer.
What gives? did Solana (CCC:LEFT USD) steal his thunder? Or is there some other explanation for his meteoric fall from grace?
I will examine these two questions.
Stellar Lumens has left the ball out of sight
I wrote about XLM-USD in mid-June. At the time, I argued that it had to deliver something other than cheap money transfers if it wanted to gain mainstream acceptance.
It’s almost contrary to think that way – what’s more useful than money transfers? – I believe investors will continue to place their bets based on breakthrough utility rather than a blockchain version of existing money transfer protocols.
In that regard, Solana seems to offer it. Stellar lumens are not. Or at least not in the way investors want, need, or expect.
There’s no question that Solana is on fire, up 57% in the last seven days through August 31st. In terms of market capitalization, it crept into eighth place at leise $ 32 billion, 4x market capitalization of Stellar Lumens.
In mid-June, XLM-USD was trading in the exact same spot as it is today. During the same period, SOL-USD gained 195%
In a Telegram chat with CoinDesk, crypto financial services firm Amber Group said institutional demand for Solana has increased in recent weeks. Money goes in instead ether (CCC:ETH: USD) alternative coins, it was said.
Angel investor Howard Lindzon speaks very high from Solana, especially Phantom, a Solana wallet he used. In his August 24th blog post, he highlights some of the key elements of Packy McCormick’s recent discussion why Solana is so great.
“What makes Solana technically interesting is that its radically different system architecture results in dramatically higher speeds and lower costs than other blockchains,” wrote McCormick on August 23. “Whereas Bitcoin (CCC:BTC-USD) can process about 7 transactions per second (TPS) and Ethereum can process 30 TPS (until Eth 2.0 increases it dramatically), Solana can currently process 65,000 TPS. “
He goes on to say that Solana is so fast: “It feels like using the internet.”
Lindzon is so right. You have to read McCormicks Solana summer Post. It really explains why the Solana ecosystem makes sense. That said, I’m being honest, I’m still trying to wrap my arms around this whole thing.
Solana seems to be miles ahead of Stellar Lumens from a pure excitement and dynamics point of view.
A fall from grace
I don’t know if it is so much that Stellar Lumens has fallen out of favor because institutional investors chose that Ripple’s (CCC:XRP-USD) Focusing on big banks and cutting the cost of their customers’ money transfers is a smarter approach than trying to do so win the Unbanked.
The best analogy would be the fisherman casting a net instead of a spear to hunt for a living. One is a lot more productive, not to mention it’s easier to execute.
As a result, Ripple has a market cap of almost 7x Stellar Lumens.
“At the end of May I said partnerships like the one that Ripple has with the National Bank of Egypt suggest that the currency has what it takes to become a leading cryptocurrency. As it stands today, it is firmly in the third place by market capitalization, ”I wrote in June.
“As for Stellar, it’s way behind Cardano (CCC:ADA-USD) which is likely my favorite cryptocurrency at the moment.”
Outside of the top 10, nothing has changed for Stellar Lumens in the past two months. It still has to pull a rabbit out of its hat to climb the market capitalization tables.
I think Solana absolutely stole the thunder from Stellar Lumens this summer. It’s going to be really hard to get it back.
While Cardano remains my favorite, Solana definitely caught my attention.
On the day of publication, Will Ashworth had no positions (either directly or indirectly) in any of the securities referred to in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publishing guidelines.
Will Ashworth has been a full-time investing writer since 2008. Publications he has appeared in include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in the United States and Canada. He is particularly fond of creating sample portfolios that will stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing, Will Ashworth had no position in any of the above securities.