This cryptocurrency has surged 400% in a month and is now the world's sixth-biggest coin

Published Wed, Sep 8 20217:08 PM EDTUpdated Thu, Sep 9 20216:11 AM EDT

A little-known cryptocurrency has only been around for a year and a half, and it's already a top 10 coin. Here's what you need to know about its meteoric rise. Solana is on a tear. The token hit an all-time high above $210 Thursday morning, according to CoinGecko data, making it the sixth-biggest digital currency with a market value of more than $60 billion. It was last trading at a price of $211.68, and is up a whopping 300% in the last month alone. Solana was worth just $1.50 at the start of the year. What is solana? Solana isn't a very well-known cryptocurrency. But it's gotten a lot of buzz lately, with the likes of Andreessen Horowitz investing more than $300 million in the start-up that created it in a June token sale. Other investors in the cryptocurrency platform include Polychain Capital, a venture capital firm founded by former Coinbase employee Olaf Carlson-Wee, and Alameda Research, a quantitative trading firm led by well-known crypto entrepreneur Sam Bankman-Fried. Solana is one of many digital currencies that's vying to take on ethereum, the world's second-biggest coin. 'Ethereum killers' Ethereum's technological underpinnings are similar to that of bitcoin . However, a key difference between the two is that developers can build applications on top of ethereum's network. That has resulted in an entire industry being built around the Ethereum blockchain, known as decentralized finance, or DeFi. NFTs, a buzzy type of token designed to represent ownership in a rare digital item, is one of many applications being fueled by Ethereum. However, other blockchains are emerging. Cardano, for example, promises to be a faster, more efficient alternative to Ethereum. The platform is gearing up for a major update this month that backers say will allow it to compete more effectively with Ethereum. This has helped propel Cardano's ada token to third-place in the rankings of the top digital currencies by market value. What's solana's pitch? A criticism of Ethereum is that it isn't scalable, so when there are huge spikes in traffic, the network struggles. The Solana platform promises to be much faster and cheaper than Ethereum. It claims to support over 1,000 transactions per second, with an average transaction fee of $0.00025. "Ethereum has relished the lion's share of the market in recent years but the fact is that it just isn't scalable," George Harrap, co-founder of Step Finance, a dashboard for Solana transactions, told CNBC. "It's far too expensive — it costs $100 to swap on Ethereum — and the fees are so unpredictable. Those new to crypto just don't want to spend that kind of money on something they will realistically know little about." Why is it rallying? Investors and analysts say it's down in large part to frenzied activity in the speculative NFT market. While many NFTs are built on Ethereum, Solana and other platforms are playing an increasingly large role. "Many people believe that the Solana protocol is best positioned to support the needs of the NFT market," Scott Freeman, co-founder of digital asset management firm JST Capital, told CNBC. "Thus, many view sol as an investment in the building blocks of NFTs." James Butterfill, investment strategist at crypto investment firm Coinshares, said institutional investors are starting to take notice of solana. "Studying the investor fund flow data has highlighted Solana total assets under management has grown from US$15m to US$44m over the last week with inflows last week totalling US$13m," Butterfill told CNBC. "This indicates it has been popular in investment funds as well as retail investors." What are the risks? Still, solana's wild rise has stunned some crypto industry figures. "Solana's ascent has been meteoric, even by crypto standards," Antoni Trenchev, co-founder of digital currency lending firm Nexo, told CNBC. A key risk with any cryptocurrency is price volatility. Bitcoin, the first and largest digital coin, went from a record high above $60,000 in April to less than $30,000 in June. It has since recovered above $45,000. Meanwhile, regulators appear to be getting tougher on the DeFi space. The U.S Securities and Exchange Commission has reportedly launched an investigation into Uniswap, the biggest decentralized crypto exchange.

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A little-known cryptocurrency has only been around for a year and a half, and it's already a top 10 coin. Here's what you need to know about its meteoric rise.