Is There Still Hope for Solana, After Being Dragged into the FTX Crisis?

 The impact that the Solana ecosystem experienced was far more severe than the majority of other ecosystems that were also affected by the FTX collapse incident. SOL, Solana's native token, has experienced a massive dump, and investors are increasingly running away.

Solana himself has a very close relationship with FTX and Sam Bankman-Fried (SBF). There's so much connection between them that the collapse of the exchange last week sent shockwaves through the Solana ecosystem. Thus, Solana's biggest fear emerged, namely the worst-case scenario regarding many investments being withdrawn and the developer deciding to leave Solana.

What's more, this downturn is also reflected in the collapse of SOL. Since the FTX drama that started hitting on November 6, SOL has fallen more than 50% and is now trading at the level of US$18.01. Meanwhile, according to data from CoinGecko, the battered coin has now also lost more than 93% of its all-time high (ATH).

A Series of Problems Being Facing solana.

Solana has long drawn criticism for its centralized, VC-backed system. In addition, the negative side is increasingly felt at this time. The network proves to be highly centralized, as both FTX and Alameda own 58 million SOL tokens. This number represents almost 11% of the total supply.

However, Valaitis noted that it remains unclear how much of this amount has been sold and how much is tied up in litigation.

In addition, the DeFi conditions at Solana have also worsened. The reason is, they have lost 96% of their TVL since setting the ATH record at US $ 10 billion. DeFiLlama reports that there is only US$335 million worth of collateral left in the DeFi ecosystem on the Solana network today.

Valaitis largely blames this situation on the Serum project, namely the DEX protocol launched by SBF. This is because many of the most popular dApps have discontinued support for Serum, and the developer is also working to remove FTX's control of the project. Apart from that, the SRM token has also fallen by almost 60% in the last two weeks.

Furthermore, due to support from FTX collateral, the Solana-wrapped DeFi token has also experienced a massive dump or selloff.

Then, finally, the Solana Foundation also has some direct involvement from its treasury to FTX. Unfortunately, around US $ 1 million in assets was stuck on the exchange when the FTX withdrawal was stopped.

According to its official documents, the Solana Foundation also has exposure to 3.24 million shares of FTX Trading LTD common stock, 3.43 million FTT tokens, and 134 million SRM tokens. The document states, “Total exposure to Sollet-based assets in the outstanding [network] Solana is valued at approximately US$40 million as of November 10, 2022.”

Thus, all events that occur become a burden of new problems; despite the Solana performance and reliability issues that have plagued its network throughout the year.

Can Solana Come Back?

This set of circumstances all paints a very bleak picture for the Solana network. However, Valaitis conveyed some hope that Solana could still recover. Because, according to the co-founder, the Solana Foundation still has a sizable treasury that can last at least another two years.

According to Valaitis, who cited the recent hackathon in Portugal as an example, there is still a "strong [developer community].'

Also, don't forget that fortunately, Solana still has a thriving NFT ecosystem and according to CryptoSlam it remains in second place even though its ecosystem is going through a rough patch. Besides, there is also high network and web3 activity on the platform. These factors make it too early to assume Solana's fate is over.