Key Challenges to Solana ETF Approval
Last week, Brazil and the United States both approved the Solana exchange-traded fund (ETF), sparking a debate within the financial community. However, despite the approvals, there are key challenges that remain for the Solana ETF, particularly concerning the native token SOL.
The Issuance of SOL Tokens
One of the core problems with the Solana ETF approval is the high issuance rate of SOL tokens. Data from the Dune dashboard as of August 11 shows that 162,503 SOLs have been issued, valued at approximately $25 million. These tokens are rewards given to validators to enhance network security. Critics are concerned that the high issuance could lead to increased selling pressure, potentially destabilizing the long-term value of the asset.
Market Demand and Institutional Interest
Smartestmoney.eth, a vocal critic, has questioned the market demand for SOL given its high issuance rate. The lack of ETFs may also be limiting institutional interest in Solana, especially with influential figures like Larry Fink turning towards Ethereum. These factors raise doubts about the sustainability of the Solana ETF in the long run.
Network Stability and Future Unlocks
Another significant concern is the stability of the Solana network. Historically, Solana has experienced major outages, including instances of the entire blockchain network rolling back transactions or becoming unavailable for extended periods. Furthermore, there are looming unlock schedules, such as the planned unlocking of 7.5 million SOL in March 2025, which could impact the asset’s value and investor sentiment.
Despite these challenges, there is still optimism in the industry, with asset managers like Van Eck and 21 Shares applying for Solana ETFs in the United States. The final decision by the SEC is expected by mid-March 2025, keeping the possibility of a Solana ETF alive.
