Last week’s fluctuations in the crypto market had the strongest impact on Solana, whose total value locked (TVL) in DeFi protocols fell by 60% to $377 million as of November 14. Solana’s market cap roughly halved over the past week.
According to DefiLlama, Solana-based protocols lost over half of TVL in the last week. The most active withdrawals are from the liquid betting protocol Marinade Finance, which lost about $146.66 million between November 7 and 14.
Other major protocols on Solana also saw a decline in TVL over the past week:
- an automated market maker Raydium — 56.84%;
- a liquid staking protocol Lido — 73.41%;
- a lending protocol Solend — 87.03%.
The SOL price plunged by 56% over the past week. Between November 7 and 14, the token dipped to the $12.93 mark. According to CoinGecko, SOL is trading at $14.45 as of 12:00 (GMT+2) on November 14. Solana’s market cap decreased by 50% during this period, reaching $5.2 billion.
Riyad Carey, Research Analyst at Kaiko, said Solana’s main reason for this performance is its connection to Sam Bankman-Fried (SBF), Founder of Alameda Research and FTX, whose crisis collapsed the entire market.
SBF was one of Solana’s first investors. CoinDesk’s report showed that Alameda Research held around $292 million of “unlocked SOL,” $863 million of “locked SOL,” and $41 million of “SOL collateral.” Therefore, SOL was the second most valuable asset in Alameda accounts after FTT. Additionally, the company owned a significant number of Solana’s tokens, such as MAPS and OXY.
What hit Solana the hardest was the news that Crypto.com had suspended all deposits and withdrawals through Solana as of November 9. On November 10, SOL dropped by 34%. Kris Marszalek, CEO of Crypto.com, tweeted that “suspending deposits and withdrawals of USDC and USDT on the Solana Blockchain” was a forced measure. However, the head of the crypto exchange didn’t disclose the reasons.
Anatoly Yakovenko, Co-Founder of Solana Labs, said the company “didn’t have any assets on FTX,” and the ecosystem is completely independent of SBF’s failures. Therefore, the rapid drop in SOL may not be related to FTX’s bankruptcy and SBF’s detention, but is a consequence of the network’s problems throughout 2022.
The Solana blockchain network has experienced technical difficulties with stability this year, with a total of ten partial or complete network outages. The performance issues were scheduled to be resolved back in the summer thanks to a Firedancer update, but the network suffered from overloads again in October. This trend negatively affects not only the SOL price, but also the community’s trust. Even the announcement of Solana’s upcoming partnership with Google Cloud and a 15% jump in the SOL price following the news couldn’t prevent the current crisis.
However, Raj Gokal, Co-Founder of Solana, expressed confidence that Q1 2023 will be the “time to shine” for Solana, despite the ongoing downturn. Regardless of the project’s failures, the crypto community still supports Solana. For example, Sandeep Nailwal, Co-Founder of Polygon, urged Solana supporters not to despair and continue developing the network.
Solana was quite successful. For instance, the number of daily transactions on Solana increased significantly. In late September, the network surpassed Ethereum by almost 40 times.
