The collapse of FTX and Sam Bankman Fried was one of the most stand out events in the crypto industry this year. This catastrophic development had a domino impact and its ripple effects were seen affecting many protocols and the entire market space in general. Solana was one of the most prominent platforms that took a hit from this collapse and saw a huge negative impact. As a consequence of this, many crypto customers and those who have been constant Solana users are wondering what is the future of the blockchain platform.
In this article, we will tell you how the future of Solana looks and what 2023 holds for the platform.
What is Solana?
If you are a beginner in the industry, this article won’t make much sense if you don’t know what Solana is all about. Solana is a decentralized, open-source blockchain platform that aims to provide a high-performance, secure, and scalable infrastructure for decentralized applications (dApps). It was developed by Solana Labs, a San Francisco-based company founded in 2017.
One of the key features of Solana is its high transaction speed, which is achieved through a number of technical innovations. For example, Solana uses a proof-of-stake (PoS) consensus algorithm, which allows it to process transactions much faster than traditional proof-of-work (PoW) algorithms like those used by Bitcoin and Ethereum. Solana also uses a technique called “gossip networking” to propagate transactions throughout the network, which allows it to scale to millions of transactions per second.
In addition to its fast transaction speed, Solana is also designed to be energy-efficient, making it an attractive option for developers looking to build environmentally-friendly dApps.
Solana has a number of dApps and decentralized finance (DeFi) projects built on its platform, including the Serum decentralized exchange (DEX), the Mirror protocol for synthetic assets, and the Anchor protocol for stablecoins.
What happened to Solana in 2022?
In the November of 2022, Sam Bankman Fried came under the public eye when it was revealed that the assets of his companies FTX and Alameda Research were alarmingly intermingled. The Solana token was also one of the other major tokens in the firm’s portfolio which cause the collapse to have a major impact on Solana. FTX’s balance sheet showed significant SOL tokens valued at $982 million As a result of being tied to Sam Bankman Fried through the blockchain he supported, the price of the token plummeted by 52% in just a week in mid-November 2022.
Learn more: 31M+ SOL to be Unstaked Today: Will SOL Collapse?
Value reduction of Solana
Last November (2021) the market value of Solana was in fact 80 billion US dollars which dramatically dropped to 5 billion dollars in 2022 November. Right now the value is around 4 billion dollars.
Mahin Gupta, who is the founder of Zebay and Liminal (Bespoke Wallet Infrastructure) also had this to say “The FTX fiasco has surprisingly caught Solana, dragging it down further to its current state. Since earlier this year’s hack, SOL has been working hard to stabilize itself. FTX’s Solana-based decentralized exchange (DEX) Serum was also down by 53% recently. Some of the assets, like wrapped BTC on the Solana DeFi ecosystem, were backed by FTX, which now has almost zero value. The Solana assets and other assets in the ecosystem will be volatile in the near future. FTX and its founding team were big backers of the Solana ecosystem. $SOL is the second-largest holding of Alameda Research after FTT, which is why Solana is facing this crisis,”
A lot of crypto tokens have fallen massively from their all-time high. Bitcoin has dropped by 75.5%, Ethereum by 75% and BNB plummeted by 64%. But the enormous drop was seen by Solana, which reduced from its all time high by 95%. Even though for a coin to be down by over 90 per cent is not a death sentence, it is important to note that the blockchain has lost 90% of its developers And a 100% of its momentum. These factors have made the bouncing back of Solana a lot more tedious.
NFTs projects bridging from Solana to other blockchains
While the TVL of Solana is down by approximately 98%, and the NFTs on Solana flee, the competitor Cardoano ranks as the top blockchain in development activity in the last month or so. Even the number of Cardano NFT trades increased by 39% in the last 24hrs, while overall trades increased by 10.47%
The value of the Solana token is down to $18 in January 2023. The NFT world of Solana has also taken a hit as the projects namely DeGods and yOOts of the blockchain are now departing from SOL. DeGods will be moving to Ethereum and yOOts will shift to Polygon in the first quarter of 2023.
DeGods is one of the most valued NFT collections on the ecosystem and has a total value of 56.77 million dollars. After it was announced that the project will be bridging to Ethereum, the collection saw a rise of 220% in trading volumes from the previous week.
SOL also is showing an extremely low volume indicator which goes to highlight that the coin hasn’t been actively traded for a while. the inverted cup and handle pattern shows a bearish pattern and other negative trends.
Read More: DeGods Review: The Hottest NFT Collection on Solana Blockchain
Centralized Nature of Solana
Solana is one of the most centralized platforms out there. However, the 2022 developments have been nothing short of highlighting the importance of decentralised platforms as we move into 2023. Today there is a requirement for blockchains and projects that are decentralized in nature while also providing scalability and security to the users.
The token allocation held by Solana is heavily centralized. There exists venture capitalists, developers and Solana Labs who on almost close to half of the fund allotted. Due to this rooted centralization, a lot of criticism has been issued by major Web3 evangelists and thought leaders.
They believe that Solana is moving away from the basic ethos and ideology of Web3. this kind of centralized token allocation is also a prominent reason as to why the protocol was affected by the FTX collapse more than Bitcoin or Ethereum was.
Will Solana’s situation change in 2023?
Even though in the past we have witnessed projects whose value has dropped dramatically bounce back in the coming years, it cannot be neglected that to accomplish this Solana does face a myriad of challenges. The overall market sentiment today remains negative, however, some people are still hopeful.
While in the crypto market nothing can be said with a complete assurance, we can see the challenges and the advantages and weigh them side by side.
Solana is very centralized, which can create some resistance amnesty the users, especially those who have faced the brunt of the collapse of similar centralized exchanges like FTX. the blockchain will have to develop new modalities and make necessary changes in the network as well as the ecosystem.
Moreover, the market is booming with capable competitors like Cardano (ADA) and Polkadot (DOT) which means that investors will grow more demanding in the coming years. in the past we have also seen the network shut down repeatedly which hasn’t done much in the favour of the blockchain.
Things that work in the favour of the blockchain are that there is a possibility of seeing new active developers. Many estimates suggest that the numbers are likely to grow in 2023 which could prove beneficial to the platform. It also cannot be forgotten that Solana is quite a fast blockchain equipped with low transaction fees and an easy to comprehend and access language to enable the building of smart contracts in addition to a good volume of development.
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To conclude
Solana may face many obstacles in the coming years, and its future will depend greatly on how the blockchain tackles with these challenges. While it is a difficult task to come back from the massive hit it has taken, it is not completely impossible. The industry is populated with an overall negative sentiment while some loyal users and believed still have faith in the platform.
When it comes to the overall future of cryptocurrency, we can say it is uncertain but promising. While it has faced challenges and setbacks, the underlying technology of blockchain has proven to be secure and efficient. As more individuals and businesses adopt cryptocurrency and use it for a variety of purposes, it is likely that we will see further development and innovation in this space. It is important for investors to carefully consider the risks and do their own research before investing in cryptocurrency.
However, those who are willing to take on these risks may be rewarded with the potential for high returns. Ultimately, the success of cryptocurrency will depend on its ability to solve real-world problems and provide value to users.
