Solana facing multiple issues
Solana, a blockchain focused on high-speed transactions and low fees, has had its fair share of problems recently, with the closing of its physical stores in New York and Miami, and the collapse of FTX, causing both financial and structural damage to the blockchain. Solana Spaces, the retail storefront chain focused on the Solana blockchain, has announced that it will be closing its physical stores in New York and Miami, with the prolonged crypto winter forcing the company to pivot its efforts to digital products like DRiP, a free NFT product with more than 100,000 sign-ups.
The closure of Solana Spaces’ physical stores is a significant shift away from brick-and-mortar gateways to onboard people into Web3. It reflects the current market reality that digital products are more efficient and cost-effective in onboarding people into the Solana ecosystem than physical stores. However, the Solana Spaces team remains optimistic and focused on the growth of their DRiP platform, with plans to expand their franchise presence globally.
FTX didn’t help
Solana’s close ties to FTX caused financial and structural damage, as FTX and Alameda were the largest backers of SOL, and Bankman-Fried heavily promoted it as a competitor to Ethereum. Since it became clear that both FTX and Alameda were struggling, the price of SOL has dropped over 50%, where it’s remained for the last few days. The drop is far greater than other network tokens, such as ETH, MATIC, AVAX, or BNB, which are down between ~25% and ~15% over the same period.
Further sell-pressure will likely follow as FTX and Alameda’s assets are liquidated. According to the leaked balance sheet that precipitated the run on FTX, Alameda held $292 million of unlocked SOL, $863 million of locked SOL, and $41 million of SOL collateral.
The damage hasn’t only been financial but also structural. As FTX’s collapse triggered major volatility across the crypto markets, the underlying Solana blockchain reportedly experienced degraded performance, interfering with liquidations on DeFi lending protocol Solend. In the wider Solana ecosystem, FTX and Alameda provided close support to teams that were developing what was once considered a potential ETH-killer.
Many of the project’s tokens were referred to as ‘Sam coins.’ Sollet-wrapped assets de-pegged on the news they were issued by FTX/Alameda, with soBTC currently valued at just $1,315 on CoinGecko, accompanied by the warning that “soBTC tokens are wrapped BTC tokens issued by FTX or Alameda. Both these entities have filed for Chapter 11 bankruptcy, and the BTC tokens are no longer redeemable.”
Hope is here
However, there is still hope for Solana to bounce back from these woes. Despite the woes faced by Solana, there are still ways that the blockchain can bounce back from these challenging times. Here are some potential solutions that Solana could consider:
Diversify partnerships and investments One of the reasons why the collapse of FTX has hit Solana so hard is because the two were so closely intertwined. Moving forward, Solana could benefit from diversifying its partnerships and investments to spread out its risk. This would help to insulate the blockchain from any one particular entity’s failures, allowing it to weather market turbulence more effectively.
Focus on building decentralized applications Decentralized applications (dapps) are at the heart of the Web3 ecosystem, and Solana has the potential to be a major player in this space. By focusing on building high-quality dapps that leverage the speed and scalability of the Solana blockchain, the platform could attract more developers and users and become a more attractive investment opportunity.
Improve communication and transparency One of the criticisms of Solana during the FTX collapse was that there was a lack of communication and transparency around the situation. Moving forward, Solana could benefit from improving its communication channels and being more transparent with investors and the broader crypto community. This would help to build trust and confidence in the platform and make it a more attractive investment opportunity.
Leverage the power of the Solana community The Solana community is one of the blockchain’s biggest strengths, with thousands of developers, investors, and enthusiasts working together to build a better Web3 ecosystem. Solana could leverage this community to help it bounce back from the current challenges by encouraging collaboration, providing incentives for developers to build on the platform, and fostering a culture of innovation and experimentation.
The woes faced by Solana are a reminder of the challenges that can arise in the highly volatile and rapidly evolving crypto market. However, by taking a proactive approach to addressing these challenges and leveraging its strengths, Solana has the potential to bounce back and emerge as a leading player in the Web3 ecosystem.