Can Solana Survive?

Once hailed as “the Ethereum Killer,” Solana (SOL) is a decentralized platform for building and deploying blockchain applications. It is designed to be fast, scalable, and secure, with the goal of enabling developers to build applications that can reach a global audience. 

The once top 10 market cap asset, SOL has slid to the 17th position, and the struggle may continue in 2023 as well.

Sam Bankman-Fried is also the founder of the Serum decentralized exchange, which is built on the Solana blockchain. Bankman-Fried has been involved with Solana and the Serum project since its inception, and has played a key role in the development and growth of both.

As FTX and Alameda continue to implode, it is clear that some crypto communities were hit a lot harder than others. Several DeFi protocols sporting close ties with the two entities have suffered. Solana, for one, has been hit the hardest since the collapse.

Solana was one of the best-performing tokens of the 2021 bull market. But since the unraveling of Sam Bankman-Fried’s crypto empire, it has lost over 70% of its value.

FTX held $982 million in SOL, according to its balance sheet. Additionally, SOL is the second largest holding of its sister trading firm Alameda Research, so it’s clear that SOL is guilty by association even if this project had nothing to do with the downfall.

The Solana ecosystem was once expected to mount a serious challenge to Ethereum, but Solana’s development activity has been on an epic decline. Developers are no longer seeing any advantages to using the network and are currently in a near-death state.

Top Solana projects such as DeGods and y00ts also announced their departure from the network to Ethereum and Polygon, which has further added to the layer 1 blockchain’s woes. 

Meanwhile, the supply of stablecoins on the Solana has taken a hit significantly over the past several weeks. Its stablecoin market cap has decreased by around 50% since November 6th from a whopping $3.9 billion to $1.8 billion.

But Solana co-founders Anatoly Yakovenko and Raj Gokal view the setbacks as temporary. The two execs recently told Fortune that the events will be crucial for the network in moving forward:

“I think in the long term, it’s really good. We’ve always heard really negative criticism about FTX’s involvement in the ecosystem and that concentration of ownership stake. So it feels like ripping the Band-Aid.”