- SOL has jumped 7x in worth for the reason that FTX-induced downturn.
- Solana’s community benefits and a loyal developer group helped script a comeback.
Round this time final yr, Solana [SOL], the favored sensible contracts community, was grappling with maybe its largest problem.
One of many world’s largest crypto exchanges at the moment, FTX, collapsed spectacularly, triggering a knock-on impact on entities with publicity to the bankrupt platform. The Solana ecosystem was one in all them.
Whereas in a roundabout way associated to FTX, SOL was extensively endorsed by the disgraced co-founder of the trade Sam Bankman-Fried (SBF). A lot in order that critics held SBF’s campaigning partly accountable for the token’s value hike seen beforehand.
Other than this, FTX made vital investments in initiatives constructed on the blockchain.
Little did Solana proponents know that the affiliation would come again to hang-out them large time.
The autumn and rise
Native token SOL plunged to historic lows within the days following the implosion. From an all-time excessive of $259 recorded only a yr in the past, the asset sank under $9 within the dying levels of 2022.
Furthermore, customers, capital, and initiatives began deserting the community.
As per knowledge fetched by AMBCrypto from DeFiLlama, liquidity value $769 million was emptied from Solana between the primary week of November when the problem surfaced, and the tip of 2022.
The sentiment across the venture, as soon as positioned because the Ethereum [ETH] killer, was at an all-time low.
However like all good issues, all unhealthy issues come to an finish too!
Lower to 2023 and Solana has scripted arguably the most effective comeback ever within the historical past of cryptocurrencies.
If you happen to believed within the long-term outlook of SOL amidst all of the FUD a yr again and resisted the temptation to promote, nicely, congrats! You’d be seven occasions richer in your SOL holdings as you learn this piece.
A lot of the positive factors got here within the late-year flourish, as seen under. Wider market optimism, mixed with Solana’s achievements throughout the yr, propelled SOL to a $44.83 billion market cap as of this writing, the fifth-largest amongst all cryptos.
Supply: CoinMarketCap
The leap in SOL’s value additionally boosted the USD worth of capital invested into completely different initiatives on Solana. At press time, the TVL was $1.42 billion, reversing all of the losses made within the aftermath of FTX’s collapse.
Supply: DefiLlama
What’s behind the turnaround?
Practically all of the analysts that AMBCrypto spoke to hailed Solana’s basic benefits as the important thing to the turnaround. Rahul Maradiya, co-founder & world CEO of Dubai-based blockchain ecosystem CIFDAQ, stated,
“Solana has a vibrant group of builders who goal to benefit from its innate scalability. Its transaction velocity, particularly, permits it to boast of many use circumstances.”
The sentiment was echoed by Jeff Owens, co-founder of layer 1 blockchain Haven 1, who argued,
“The truth that Solana is quick, low cost, and appears to have shaken off the reliability points that plagued the chain in 2021 appears to point that Solana is right here to remain.”
In actual fact, Solana itself credited the exhausting work of its developer group in flipping issues round. In a press release shared over mail, Austin Federa, Head of Technique for the Solana Basis, said,
“The collapse of FTX hit your entire trade exhausting, however the place the community is in in the present day is fully because of the resiliency and capabilities of Solana’s world builder group. The Solana group went again to work, constructed by way of the bear, and a yr later we’re seeing the fruits of that dedication and energy.”
On the face of it, these arguments maintain water. Solana is among the quickest blockchains in operation as of this writing, with a median of three,500 transactions per second (TPS) over the past month, in response to Solscan.
Theoretically, Solana can deal with 50000–65000 TPS, aligning with fee giants from the Web2 world. Compared, Ethereum, the a lot greater sensible contracts community, averaged between 10-13 TPS over the yr.
Supply: Solscan
Furthermore, Solana gives exceptionally low transaction charges as nicely, when in comparison with Ethereum.
The typical transaction payment paid by Solana’s customers within the final epoch was 0.00003304 SOL, or $0.002, as per SOL’s market worth at press time. Then again, Ethereum charged 48 gwei, equal to $2.19, on common to validate a transaction.
It was clear that Solana by no means misplaced out on its basic strengths — cost-effectiveness and velocity — essential traits for any blockchain value its salt.
Such community benefits go a good distance in attracting decentralized functions (dApps) in several realms like finance, gaming, and non-fungible tokens (NFT).
That is exactly why lots of the ecosystem’s builders caught with the community and contributed to its progress.
The yr that glided by
Amidst the relative calmness of the bear market, Solana centered on constructing high-profile partnerships with Web2 giants.
Arguably essentially the most vital amongst them was the partnership with funds large Visa. The partnership concerned the extension of its stablecoin settlement capabilities to the Solana chain.
The event was frantically cheered by the Solana group as a result of a serious TradFi participant thought-about the community for funds for the primary time.
Whereas Visa was already utilizing Ethereum [ETH] for its pilot venture, the choice so as to add help for Solana was motivated by the excessive transaction throughput and low prices.
Visa acknowledged Solana’s strategic benefits whereas saying the partnership.
Other than this, Solana introduced the combination of Solana Pay, its native funds answer, with widespread e-commerce firm Shopify.
The combination allowed retailers and entrepreneurs to bypass excessive transaction charges typically related to Web2-based third-party fee processors.
Solana’s technical prowess was acknowledged by friends from the Web3 group as nicely. MakerDAO, a number one stablecoin issuing protocol, thought-about utilizing Solana as a substitute of Ethereum for its upcoming stand-alone blockchain.
Praising Solana’s technical capabilities, Maker’s co-founder Rune Christensen said that the PoS community would stay the most effective match to handle Maker’s particular wants.
He additionally attributed the sturdy developer ecosystem as a serious motive behind selecting Solana.
Simply the ‘Hearth’ Solana wanted
It’s no secret that Solana has a historical past of downtime points and community halts. In actual fact, co-founder Anatoly Yakovenko went to the extent of terming community outages as “Solana’s curse” in one in all his older interviews.
Solana suffered its first main community outage of 2023 in February, lasting almost 20 hours. Nonetheless, since then, the community has maintained a 100% uptime.
Nonetheless, even these one-off glitches might be a factor of the previous as soon as Solana’s upcoming validator consumer, Firedancer, is about in movement. A substitute for the prevailing natively-developed consumer, Firedancer is being developed by a 3rd occasion.
Solana govt Austin Federa remarked,
“On the Basis we’re wanting ahead to the launch of FireDancer, a wholly new validator consumer for the Solana community. Having a second validator consumer implementation will even additional improve the resiliency and reliability of the community.”
As of this writing, Firedancer’s take a look at model has been launched, with the mainnet launch anticipated within the first half of 2024.
Solana lastly goes BONKers
In the course of the peak of the FTX-induced negativities, Solana launched a dog-themed token Bonk [BONK]. The said goal of the meme coin was to shift the main focus away from ‘poisonous Alameda tokenomics’.
Whereas the asset did reach infusing a constructive vibe into SOL initially, it rapidly light into irrelevance. Nonetheless, the true present began a lot later.
The late-year rally and enhancing sentiment across the Solana ecosystem trickled all the way down to the meme coin.
From a market cap of $10 million in mid-October, BONK exploded to $1.29 billion on the seventeenth of December, giving unreal 106x returns to its holders.
The surge propelled BONK to turn out to be the third-largest meme coin out there, AMBCrypto noticed utilizing CoinMarketCap’s knowledge.
Supply: CoinMarketCap
Not like among the different memecoins that lack utility, BONK has use circumstances within the Solana ecosystem, together with utilizing the token as fee for NFTs.
What subsequent for Solana?
With Solana all poised to finish 2023 on a superb word, the following query that’ll be on the thoughts of Solana fans will likely be — What to look forward in 2024?
So far as the much-publicized ‘Ethereum Killer’ narrative is anxious, it may in all probability go and discover some sound sleep. Most specialists that AMBCrypto spoke to dominated out the opportunity of Solana dethroning Ethereum quickly.
Stefan Rust, CEO of impartial financial knowledge aggregator Truflation, opined,
“I don’t suppose Solana is an Ethereum killer. There’s an excessive amount of momentum and robust management already behind the Ethereum community to the extent that Ethereum is not constructing simply with ETH. Plus the liquidity benefit that’s accessible on Ethereum goes to be very exhausting to meet up with.”
Nonetheless, Solana backers nonetheless have a lot to look ahead to. On the prospects of SOL storming into the highest 5 record of cryptos by market cap in 2024.
Inasmuch, Johnny Gabriele, Head Of Decentralized Finance at Web3-native incubation studio CryptoOracle, made a daring prediction.
“On the prime of this bull market, Coinmarketcap will say: 1. Bitcoin 2. Ethereum 3. Solana. I consider three will reside in concord at some point.”
Rahul Maradiya additionally gave a thumbs as much as the chance of Solana ending up within the prime 5,
“As Solana continues to development upwards, there’s the very actual chance that BNB turns into caught up with ongoing Binance-related drama. BNB doesn’t have to crash to ensure that Solana to ascend. As a substitute, every solely wants to maneuver marginally in reverse instructions.”
Thoughts the challenges
Maybe essentially the most vital obstacle to attaining these targets will come from regulators.
Do not forget that america Securities and Exchanges Fee (SEC) labeled SOL, together with a couple of different main cryptos, as securities in a lawsuit filed towards Binance earlier within the yr.
Regulatory crackdowns this yr, and on the whole, have brought on vital harm to the entities focused. No matter how sturdy the basics seem like, it could all come all the way down to compliance and legality in the long run.
Secondly, FTX obtained judicial approval to liquidate the recovered crypto-assets and pay out the collectors who’ve patiently waited for his or her cash for the reason that platform’s demise final yr.
The issue — It may apply vital downward strain on SOL.
SOL was FTX’s largest holding, as per a latest report by CoinGecko. At about 55.8 million, it equated to almost 13% of the asset’s circulating provide.
If the whole thing of SOL holdings are dumped out there, SOL’s value may nicely be on the threat of falling to lows seen after the collapse of the trade final yr.