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No blockchain has been hit harder than Solana by the fall of FTX. Is its end inevitable or could it return?

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OThe Solana network has grown rapidly over the past 2 years to become one of the largest blockchains in terms of both market capitalization and usage. Growth was largely driven by Sam Bankman-Freed, who was both a major investor and the voice of the entire ecosystem. FTX and Alameda were connected to Solana in four ways:

  • SOL Token
  • Solana Defi
  • Ecosystem Investments
  • Pieces of Solana’s Treasury

FTX and Alameda held almost 58.08 million SOL tokens, or 11% of the total. Meanwhile, the price of SOL has dropped over 50% in the last seven days, but it’s not clear how much of that has been dumped by FTX compared to other investors.

Apart from SOL, Solana DeFi has also been hit hard as TVL has dropped from $10.17B in November to $327M as of now. Along with Serum, the best DEX on Solan launched by SBF has also fallen heavily along with other projects such as Magic Eden and Phantom.

Basically, the critical issue with Solana DeFi is the assets in the wrapped tokens. SoBTC and soETH dropped heavily as they were both collateralized on FTX. Finally, the Solana Foundation handled its treasury directly with respect to FTX. They have $1 million worth of assets stuck on FTX before withdrawals were put on hold. They also own 3.24 million FTX common shares and 3.43 million FTT shares. Unfortunately, both are approaching $0.

Consequences of impact!

In a recent update, Tether announced the transfer of $1 billion from Solana to Ethereum without changing the total supply.

Tether said it will conduct an exchange chain to move $1 billion from Solana to Ethereum in order to reduce the total liquidity on Solana. binance

Will Solana bounce back or leave to meet her end?

Undoubtedly the situation for Solan

  • big treasury
  • Strong developer community
  • Thriving NFT Ecosystem
  • High network activity

Collectively, we are still in the early stages of cryptocurrencies and therefore it is too early to predict whether the Solana ecosystem will die or not. The price of SOL and the entire ecosystem could recover in the same way that Ethereum did in 2018.

Written by khirou

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