Journalist
Posted:
- Justin Bons defended Solana’s economic design and rejected comparisons to the collapse of Terra Luna.
- Despite bearish trends, the MACD signaled potential bullish momentum for Solana’s price recovery.
Solana [SOL] fell 2.21% in the past 24 hours despite the crypto market’s rebound, with the global market cap reaching $2.07 trillion after a 0.65% increase.
However, there were growing concerns about SOL’s economic framework.
Concerns about Solana
Some critics drew parallels between Solana and Terra Luna, the blockchain project that collapsed in 2022.
However, these comparisons have been dismissed by Cyber Capital’s founder and CIO Justin Bonswho deemed the concerns exaggerated and unfounded.
In response to the growing rumors and concerns, Bons stated:
“Solana has an excellent economical design. With a long-term inflation rate of 1.5% combined with a burn rate of 50% of the base rate. It’s perfect because tail inflation ensures long-term sustainability, while combustion enables scarcity. The fear mongering surrounding SOL’s economy is FUD!”
What else is going on?
Bons explained that SOL’s economic design is traditional and follows the same principles as major blockchains such as Bitcoin [BTC] and ether [ETH].
He pointed out that during the early stages of many blockchains, including SOL, there is a phase of high inflation, which gradually decreases over time – a common and intentional strategy for many cryptocurrencies.
Bons emphasizes that Solana’s economic model mirrors that of Ethereum after the EIP-1559 upgrade, which introduced mechanisms to control inflation by lowering transaction fees.
Is the comparison with Terra Luna justified?
Bons believes that Solana’s token economy is healthy and not comparable to the collapse of Terra Luna.
He added:
“The only significant difference is that SOL is scalable, while ETH is not. According to my statement, a scalable chain with low fees will in any case be able to generate much more fee income in the longer term.”
Addressing distribution concerns around SOL tokens, Bons noted that Solana’s upcoming token unlocks are more beneficial compared to other emerging blockchains such as Aptos. [APT]Sui [SUI]and Sei [SEI].
He said,
“These chains all have much larger unlocks, and the distributions are much more insider-oriented compared to SOL. The extreme story against SOL therefore does not correspond at all to current reality.”
He concluded his speech by emphasizing his point when he said:
“SOL has an ideal economic design, and if you don’t realize that, you’re burying your head in the sand!”
SOL’s price action explained
Amid these concerns, Solana’s price performance has been disappointing, as confirmed by the RSI, which remains below the neutral level, indicating a bearish trend.
However, the MACD paints a slightly different picture, with the MACD line above the signal line, indicating that bullish momentum still continues, offering some hope of a recovery.
Source: trading view