If rumours of a $450 million funding round are true, leading Ethereum challenger Solana could make a big play to become the preferred blockchain for decentralised applications such as DeFi and NFT offerings.

Solana had planned to close a smaller funding round in March, but expanded its plans as bitcoin reached an all-time high price of $64,671 in the spring.

Solana is home to a slew of decentralised products, including Serum, a decentralised exchange founded by multi-billionaire FTX founder Sam Bankman-Fried that has surpassed $4 billion in trading volume since its launch last August. Solible, an NFT marketplace, and Atomic, a non-custodial crypto wallet, are among the other users.

The funds will be used to further develop the blockchain and gain market share, according to the report. It could also be used to fund and encourage developers to build on Solana rather than competitors, which is a necessary step for a new blockchain. Solana committed $20 million to network projects in May as part of a partnership with MATH Global, and raised $60 million to support projects in emerging markets such as Brazil, Russia, India, and Ukraine. Then, in June, Solana launched another $20 million fund in collaboration with ROK Capital to expand further in South Korea.

Ethereum has struggled to meet booming demand for DeFi products, most of which are hosted on the platform, due to network congestion and high transaction fees, which reached an all-time high of $70.8 in May. According to blockchair data, Solana can process over 1,000 transactions per second (TPS), while Ethereum can handle about 14 TPS. However, Etheruem could become more efficient following a critical update that will switch the blockchain from proof-of-work to proof-of-stake in 2022.

Solana has received a total of $21.8 million in funding through five rounds of funding. If the rumoured current round raises even $300 million, it will rank among the top six venture capital rounds in cryptocurrency and blockchain history.

Multicoin Capital was the lead investor in Solana's early funding rounds, and in exchange for their investments, they received the blockchain's native token, SOL. Blocktower Capital, Blockchange Ventures, Reciprocal Ventures, Slow Ventures, Foundation Capital, Rockaway Ventures, Distributed Global, Kevin Rose, and Lyndon Rive were among the other investors. Forbes has been unable to confirm the existence of this rumoured round's participants.

Despite Solana's rapid rise and growing war chest, the organisation still faces significant challenges. It is not the only prominent Ethereum successor, as Algorand, Cardano, Tezos, and Polkadot are also contenders.

Furthermore, this amount of funding, particularly if issued in Solana's native token (SOL), may attract the attention of regulatory authorities such as the SEC, who may believe the SOL tokens are securities. To date, bitcoin and ether are the only pure crypto assets that have been deemed or believed to be non-securities by either the SEC or the CFTC. Garrick Hileman, the SEC's former Director of Corporate Finance, suggested in 2018 comments that ether may have been a security in its early days before becoming sufficiently decentralised.

The native token of the blockchain, SOL, has 477,855,617 tokens in circulation and is available on two US exchanges, Binance.us and Coinbase pro.

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