One of the leading blockchains has run into difficulties: its cryptocurrency has fallen in price, and application developers have begun to leave the network. Why this happened, how FTX collapse is related to it, and what’s next for the project
Solana has fallen 62.5 percent since the beginning of the month, from $32 to $12. Crypto projects began to exit the blockchain and investors began to get rid of assets in related coins. We explain why Solana is in trouble amid the FTX crash and what the network and its SOL token have in store.
The Solana and FTX
Solana’s blockchain is a high-bandwidth, fast-transaction network. It was founded in 2017 by Anatoly Yakovenko of Solana Labs. While other blockchains suffer from scalability and speed problems, Solana uses an algorithm that can process thousands of transactions per second, for which it has been dubbed the “Ethereum killer.
FTX and Alameda have been major partners in Solana and have been active supporters of the project. After FTX group companies filed for bankruptcy, the Solana Foundation team released data on its assets related to Sam Bankman-Fried companies.
Against the background of the events with FTX began a massive sale of SOL token, which led to a drop in its value. Solana coin rate collapsed from November 8 (when the head of Binance announced the sale of tokens FTT) to November 10 twice – from $28 to $14. Since then, the coin has fallen even further: as of 5:00 p.m. Moscow time on November 21, it is worth about $12.
The asset’s capitalization has dropped from $10.8 billion to $4.3 billion since Nov. 8. Blockchain cryptocurrencies Polygon and Tron have surpassed Solana in the ranking of the largest capitalized coins.
Alameda has invested in many Solana-related projects, such as Serum (SRM), MAPS (MAPS) and Oxygen (OXY). The tokens of all of these startups have also begun to rapidly lose value.
Exodus of projects and assets from the Solana blockchain
In November 2021, DeFi-applications stored more than $10.1 billion on the Solana network, according to analytics platform DeFiLlama. The value of these assets was falling along with cryptocurrency prices, just like in other blockchains. However, the FTX scandal caused a sharp outflow of funds from the Solana network.
Since November 2, when CoinDesk published an article about Alameda Research’s problems with reserves, the value of blockchain assets in the Solana network (TLV) has fallen from $960 million to $285 million. During that time, $675 million, or 70% of the volume at the beginning of the month, has left the network.
DeFi projects Mango Markets and Cashio left the blockchain completely. The Nirvana protocol has reduced funds in Solana by 95%, Solend by 90%, and Lido by 76%.
Amid the collapse of FTX and the problems of the Solana network, the Binance exchange announced plans to create a fund to help cryptoprojects that are strong at their core but have run into problems. Changpeng Zhao’s idea was supported by Project Tron, the Huobi Global and Poloniex exchanges.
A little later, the developers of Ethereum Pow responded to the call, and the OKX ecosystem announced $100 million to support projects that began to experience liquidity problems and help them migrate to the OKX Chain network.
Solana token and blockchain perspectives
Apparently, the collapse of FTX started a chain reaction. This event could start a new series of bankruptcies, and the decline in asset values could continue.
As for the blockchain the team will continue its work, fix bugs and scale the network. The expert believes that Solana will continue to develop and application developers will not stop working on their projects within the ecosystem.
