Crypto altcoin Solana, which was tied to a blockchain backed by Sam Bankman-Fried, declined more than 52% in just a week, leading the crypto slump as the fallout from the collapse of Fried’s FTX empire continued to reverberate. Solana’s market value has fallen from a peak of almost $80 billion last November to just over $5 billion, according to data from CoinGecko. By comparison, ether has fallen about 20% and bitcoin 19%.
“If we look at the performance of Solana, it has slipped by 95% from its all-time high in November 2021. The recent developments at FTX have rattled the crypto market which is pushing investors away from riskier assets. The market is anticipating that Alameda research could offload its entire SOL holdings which is its second-largest holding after FTX,” said Tarusha Mittal, COO and Cofounder of UniFarm, a group staking platform.
It is important to note that Solana is a layer 1 blockchain meant to facilitate smart contracts and forms the foundation for crypto-related financial services and the long-term prospects of SOL cannot be underestimated as the mass adoption of Defi will thrive on Solana and other similar blockchains, Mittal added.
Solana is backed by Alameda Research, the crypto trading house which like FTX is run by Sam Bankman-Fried. FTX’s venture capital arm had invested in several Solana-based projects.
Solana co-founder Anatoly Yakovenko tweeted that development company Solana Labs didn’t hold any assets on FTX and had enough financial runway for around 30 months.
“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,” said Mahin Gupta, Founder of Liminal, a digital wallet infrastructure platform.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
(With inputs from agencies)
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