No Blockchain than Solana has been Hit Harder by the FTX Fallout, Is its End Imminent or Could Make a Comeback?
Over the past 2 years, the Solana network has rapidly risen to be one of the largest blockchains by both market cap and usage. The growth was largely driven by Sam Bankman-Fried who was both a massive investor and voice of the entire ecosystem. The FTX & Alameda were connected to Solana in 4 ways,
- The SOL token
- Solana DeFi
- Ecosystem investments
- Parts of Solana treasury
FTX & Alameda owned nearly 58.08 million SOL tokens, or 11% of the total supply. Meanwhile, SOL price has dropped more than 50% in the past seven days, but it is not clear how much of this has been dumped by FTX compared to the other investors.
Apart from SOL, Solana DeFi also has been a hard hit as the TVL has tanked from $10.17 billion in November to $327 million at the moment. Alongside, Serum, the top DEX on Solana launched by SBF also dropped heavily along with other projects like Magic Eden & Phantom.
Mainly, a critical issue with the Solana DeFi is its wrapped token assets. The soBTC & soETH dumped heavily as they both were backed by collateral on FTX. Lastly, the Solana Foundation had some direct exposure of its treasury to FTX. They have $1M in assets stuck on FTX before withdrawals were paused. They also hold 3.24M common shares of FTX trading & 3.43 million in FTT. Unfortunately, both are heading towards $0.
The Aftermaths of the Impact!
In a recent update, Tether announced the moving of 1 billion USDT from Solana to Ethereum without changing the total supply.
Tether said that it will conduct a chain swap to move 1 billion USDT from Solana to Ethereum to reduce the total amount of circulating supply on Solana. Binance had earlier suspended USDC & USDT from Solana but quickly resumed them, while Okex delisted both on Solana & stopped accepting deposits & withdrawals. Meanwhile, Circle confirmed the normal functioning of USDC on Solana.
Will Solana Bounce Back or Left to Meet its End?
Undoubtedly, the situation for Solana is extremely bad at the moment. However, it does not definitely mean that it’s time to write off Solana. Here are the possible reasons why the network could bounce back finely.
- Large Treasury
- Strong Developer Community
- Thriving NFT ecosystem
- High network activity
Collectively, we are still in the early stages of cryptocurrency, and thus, it is too early to predict whether the Solana ecosystem will die or not. The SOL price and the entire ecosystem may revive similarly to what Ethereum did back in 2018.