- When FTX was still at the top of its game, it amassed vast sums of SOL(Solana). This boosted Solana’s ratings and ecosystem significantly.
- The price of Solana fell by 94.2% by the time 2022 came to a close.
- Despite the significant loss of their native altcoin, Solana mainly focuses on building the Web3 community
As 2023 finally rolls, many are hopeful for a new year and a new turn for the crypto industry. Unfortunately, there are those still healing from the wound they received from the crypto collapse in November. The FTX crash caused a multitude of Altcoins to drop in value significantly. The crypto market was in chaos for some time as more crypto traders opted to withdraw their funds before their respective crypto ecosystems crashed. According to experts, the sheer damage that the FTX crash has caused will take at least two years to recover from. The crypto winter, which many thoughts was merely a passing event, now looms as a permanent occurrence in the crypto world. Numerous s crypto exchange platforms were affected by the crash, but none have suffered and lost most of their profitability as Solana.
Solana’s relationship with FTX
Solana is known as the next revolution in the crypto industry. Its primary purpose, functionality and mechanism were to rival and eventually replace Ethereum. During its creation, many other blockchain developers focused on improving existing crypto coins or, instead, blockchain networks.
Anatoly Yakovenko founded the Solana blockchain to develop a more efficient and faster alternative to Ethereum. At the time, many people were awed at the determination of an individual, a general startup with hopes of going toe-to-toe with a big league in the crypto world.
Ironically, Solana intriguingly gained fame and support at an alarming rate. Its utilization of hybrid consensus mechanisms provided a whole new look to cryptocurrency. The incorporation of Proof-of-Stake and Proof-of-History was nothing short of peak ingenuity and creativity. Its efficiency and speed were enough evidence to convince Sam Bankman, former CEO of FX, to take an interest in their operations.Sam eventually became a big supporter of Solana and backed several crypto exchange platform projects. At the time, FTX was still at the top of its game and amassed vast sums of the crypto exchange’s native altcoin, SOL(Solana). This boosted Solana’s ratings and ecosystem significantly to a point Ethereum genuinely saw some level of competition. Unfortunately, this direct and open support of the altcoin soon became its undoing as the crypto crash shed a negative light on Sam Bankman and every single project associated with it.
Solana’s partnership led to its steady fall
A bad reputation in the crypto ecosystem goes a long way. It has a domino effect, crashing the entirety of the entity and along with anything remotely associated with it. In a previous article, we highlighted the importance of trust in the crypto ecosystem. A lack of it led to the instant fall of FTX.
Solana’s open relations with FTX were the sole purpose of its instant plummet from glory. According to Reuters, the price of Solana fell by 94.2% by the time 2022 came to a close. The entire crypto ecosystem felt the ripple effect caused by the crypto crash, but it’s directly associated with it a little more.
This is a significant loss, keeping in mind that throughout 2021, the altcoins had gained over 12000%. This enabled it to reach an all-time high of approximately $250 by November 2021. Throughout 2022, it did face some trouble as users and its competitors gradually questioned its “superior hybrid protocol”. However, Solana held firm in proving to everyone throughout the crypto ecosystem that using hybrid consensus mechanisms solved various issues caused by having just one.
Within the year, it gradually fell short as its blockchain network experienced various technical difficulties, which caused an outage reducing its value from $250 to a little over $94. Despite this, Solana still held firm. Unfortunately, its downfall came within a week of the FTX announcements causing its prices to drop by 70%.
Why? Simply the fact that Sam supported Solana brought its operations into question. Dong, this instantly placed the company in the wrong kind of limelight. As a result, many crypto traders opted to take their leave, and many withdrew their stored altcoins.
Another aspect that caused Solana to drop was the developer flight. Solana had various revolutionary projects, such as solving bitcoin and ether’s transaction rates. According to their documentation, they intended to scale beyond 15 transactions per second worldwide, transforming the blockchain ecosystem of both crypto coins. Unfortunately, active developers on the crypto exchange fell from 159 to 67, according to Token Terminal. This instantly set back their operations by nearly half the time.
Is there any hope for Solana
Despite its lack of developers, the FTX crash and its initial technical issues, Solana still refuses to back down. According to Federa, the blockchain network still receives developers within its ecosystem. The company may have suffered from a brief moment of suspicion, but its practicality and revolutionary concepts speak for themselves.
Anatoly told Bloomberg that rather than focusing on price action, the public should focus on having people build decentralized stuff. The prospects of Solana are to create and improve upon the existing system. Despite the significant loss of their native altcoin, Solana mainly focuses on building the Web3 community.
This zeal and encouragement have kept its operations steady during this crypto collapse. There are still many things developers can build only on Solana; thus, despite all the bad reputation it received from its association with FTX, they still stay.
Also, Read Solana: Fastest-growing cryptocurrency shakes the crypto space with its hybrid consensus mechanism.