Solana is heavily intertwined with the FTX exchange and Sam Bankman Fried, so much so that the collapse of this exchange last week brought a lot of volatility to the Solana ecosystem. In the current situation, the biggest fear is that investors and developers will abandon this ecosystem. Is it game over for Solana or can this ecosystem revive itself?
To Report Uncrypto, the collapse of this ecosystem is reflected in the fall in the value of the Solana token. Since the beginning of the FTX crisis on November 6, the price of Solana has fallen by more than 50% and is now trading at just over $14. According to CoinGecko data, the value of this token has decreased by more than 94.5% compared to its highest price of $260.06.
W3T founder Alex Valaitis tweeted on November 16 why he still thinks it’s not over for Solana.
First, the glass is half empty
Solana has long been criticized for being backed by venture capitalists and being concentrated. Currently, the negative side of this is very evident. The ecosystem is concentrated, as the FTX exchange and Alameda hold 58 million Solana tokens, which is roughly 11% of the total supply.
It’s unclear how much of this has already been released and how much is tied to the FTX lawsuit, Valaitis noted.
Solana’s DeFi plans have also been hit hard, with a 96% drop in the value of total locked-in capital since its peak of $10 billion. According to Defay Lama data, there is currently only $335 million in collateral in Defay Solana’s division.
Valaitis blames many of these problems on Project Serum, a decentralized exchange started by Sam Benkman Fried. Many leading decentralized applications have dropped support for Serum, and the developers are trying to remove FTX’s control over the project. Also, the price of SRM token has decreased by 60% in the last two weeks.
In addition, the value of DiFi Solana’s Rapped Tokens also fell due to the fact that they were backed by FTX collateral. Finally, the Solana Foundation had invested a portion of its coffers directly into FTX. By stopping withdrawals in this exchange, about one million dollars of Solana Foundation’s assets are locked in this exchange.
Also, according to the information of an official document, the Solana Foundation has an investment of 3.24 million shares of the public stock of the FTX exchange, 3.43 million FTT tokens and 134 million SRM tokens. The document states: “The total value of Solana-based invested current assets as of November 10, 2022 (November 19, 1401) is approximately $40 million.
Add all this to Solana’s performance and reliability issues, which have plagued the network all year.
A reason to revive Solana again
Although all these problems paint a very bleak picture of Solana’s future, Valaitis is hopeful for Solana’s revival in the future. According to one of the founders of this ecosystem, the Solana Foundation still has an acceptable fund that can last at least another 2 years.
Solana still has a strong community of developers, Valaitis said, referring to a recent hackathon in Portugal.
According to CryptoSlam data, Solana still has a thriving NFT ecosystem that remains in second place despite all the ecosystem’s problems. Also, the high level of network activity and 3G web applications on this platform makes it hard to ignore.