By George Ward
The collapse of the FTX empire has a spillover effect on most crypto entities, and the most hit is Solana. However, there was huge selling pressure on its native token (SOL), and investors are shying away from the asset.
The Solana ecosystem is very much connected to FTX and its CEO, Sam Bankman-Fried. Hence, the exchange’s crash has heavily impacted the network’s stability.
There is panic among the Solana community that investments are being halted, and developers are fleeing.
SOL tumbled significantly at the start of the FTX crisis on November 6. The token has dropped over 65% and currently trades at $13.19. As per CoinGecko, SOL has lost over 93% of its all-time high.
Solana’s Criticism
Meanwhile, some crypto community members have been critical of the network’s centralized structure. In addition, it is also a venture capital-backed enterprise, which, unfortunately, is evident from the FTX troubles.
FTX and Alameda Research are centralized entities, each owning 58 million SOL tokens. Their assets represent close to 11% of Solana’s coins.
Furthermore, decentralized finance (DeFi) on Solana also witnessed severe battering. The total value locked (TVL) reached 96% following its then-all-time high of $10 billion. A DeFiLlama report shows that only $335 million worth of DeFi collateral remains on Solana.
However, top industry analysts pinned all these problems on Project Serum, a decentralized exchange (DEX) launched by the FTX founder. Accordingly, most leading dApps no longer support Serum, and developers are pushing to remove FTX from the project.
The Solana Foundation also has significant exposure to FTX through its treasury. Roughly $1 million of the foundation’s funds were stuck with FTX when the platform suspended withdrawal.
Additionally, official documents show the foundation has 3.25 million FTX Trading LTD stock shares, 3.44 million FTT tokens, and 135 million SRM tokens. All the above points to Solana’s reliability and performance issues, which have become a mainstay of the network.
Will Solana Make a Comeback?
The Solana Foundation is still in the custody of a modest treasury that would help stabilize the situation for up to two years. Also, the network has a strong developer environment, with the Portugal hackathon a notable example.
Solana operates a thriving NFT marketplace and retains its second spot despite the latest woes. Moreover, despite its shortcomings, the network has shown remarkable capabilities in its blockchain infrastructure.
With a high network and Web3 activity on the platform, it may be too soon to dismiss Solana’s recovery.