Since its last all-time high, the Solana blockchain’s SOL has fallen 96.5%, wiping out more than $92 billion in capitalization. While the network was strongly supported by FTX, its future is now uncertain.
Solana blockchain suffers from FTX scandal
While the Solana blockchain benefited greatly from the last bull market, with a SOL token going from a few dollars at most, to nearly $260 at its all-time high (ATH) in barely a year, disillusionment is strong today. And for good reason, the same asset is trading at $9.15 at the time of writing, a devaluation of about 96.5%:
Fall in the price of SOL since its ATH
In terms of capitalization, that’s just over $92 billion wiped out.
Over the last 24 hours, the price of the asset has even touched $8, a level that had been exceeded since February 2021.
In addition to the bear market affecting the entire cryptocurrency ecosystem, the Solana blockchain is particularly suffering from the mid-air explosion of the FTX charade. Indeed, the network has benefited from significant support from Sam Bankman-Fried throughout its growth, while the latter is now being prosecuted for stealing his customers’ money.
The Solana community has thus unwillingly paid the price for the media coverage that has followed this affair, so much so that it will take a lot of work to regain the trust of investors.
Promising technical advances
Beyond the FTX scandal, the promises of the Solana blockchain were nevertheless interesting. This was notably due to its novel consensus mechanism, the Proof of History (PoH), which allowed it to offer remarkable speed for extremely low transaction costs. These elements even contributed to Solana being dubbed the “Ethereum killer”.
Despite this, the network is also often criticised for its regular outages, which sometimes cause the blockchain to temporarily shut down.
For his part, Vitalik Buterin, the founder of Ethereum, expressed his support for the Solana community in a tweet published last night:
Some smart people tell me there is an earnest smart developer community in Solana, and now that the awful opportunistic money people have been washed out, the chain has a bright future.
Hard for me to tell from outside, but I hope the community gets its fair chance to thrive
– vitalik.eth (@VitalikButerin) December 29, 2022
In this tweet, he explains that many people feel that now that FTX’s dirty money has been washed away, the community of serious developers building the network is able to move forward. Vitalik Buterin goes on to encourage:
“It’s hard for me to talk about it from the outside, but I hope the community gets its chance to thrive. “
As with many projects during this market phase, Solana’s future remains uncertain. But if the players building the network can overcome this hurdle, there’s no reason why this blockchain can’t come back to the forefront at some point.
