Solana, a project that claimed to be the new Ethereum killer and was once valued at almost $260, is now in trouble, losing 95% of its value since the FTX collapse, and is forecasted to drop further. Solana’s lack of prioritization on decentralization led to the ingestion of spam and bots, forcing developers to shut down the entire blockchain for hours, leading to losses for users’ open trades and leaving it vulnerable to further DDoS attacks. Up to 90% of Solana developers have left, with top NFT projects moving to Ethereum and Polygon, leading to a significant drop in total value locked assets on the network.
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The Rise and Fall of Solana
Kids, you remember when your dad left to go to the store and get some milk but unfortunately he never came back? Well, that potentially could be Solana. It’s time we talk about this dead project and find out if your daddy’s ever coming back from the store. Let’s get it!
The Early Days of Solana
Solana was definitely one of the hottest projects during the last bull run. Between early 2020 and late 2021, the price climbed from $1 all the way to almost $260. And it seemed like it wasn’t just speculation at the time. They were adding a ton of developers to the ecosystem. They had applications that people were actually using. And Solana was the leader in the house when it comes to being the new Ethereum killer. Was this going to be the project that was going to take ETH out finally?
The Issue with Decentralization
The tricky thing about blockchains is that the decentralization part is what makes the user experience slow, clunky, expensive and complicated. But yet the decentralization is the No. 1 thing that makes this technology valuable. It wasn’t long before Solana started reaping what it sowed when it came to its lack of prioritization on decentralization.
Problems on the Network
The low costs of fees on the network made it easy for spam and bots to infiltrate what they had built. And when these bot attacks occurred, the Solana developers likened them to DDoS attacks on Solana. In some cases, these bots would manage to shut down the entire blockchain for hours, something that’s obviously unacceptable in the world of crypto that’s supposed to be 24/7.
The Connection to FTX
Despite all these problems, the Solana price, it kept thriving throughout the entire bull market. And now we understand why. It was due to market manipulation from SBF, FTX and Alameda, which is all basically the same thing. And when the SBF house of cards began to crumble, things started looking quite dire for Solana.
The Exodus of Developers
Now, we’re getting reports that developers are leaving Solana in exodus. A report from Token Terminal says up to 90% of the developers have left. Now, the official Solana account, they hit back. They said that’s not true. They claim there’s 25,000 unique developers still working on the platform citing data from the audit firm sec3, although it seems this auditing firm is specifically focused on the Solana ecosystem. So there might be a potential conflict of interest. Regardless of the exact percentage, developers are leaving in droves.
What’s Next for Solana?
As far as TVL, or total value locked in assets on the network, well, it’s down 98%, from $215 million all the way down to a measly $10 million. If Solana can’t turn things around, it could be the next EOS or Tron, layer 1 projects that were once hyped up as Ethereum killers but are now largely irrelevant. The lesson to be learned here is that while layer 1 investments offer a lot of potential value in the next bull run, don’t get led astray by the latest VC toy. Look for projects with strong development, a professional team, and actual users. And when they crash, don’t be left holding the bag.
