London (Parliament Politics Magazine) – The debate has accelerated over the prospects of Solana. The layer 1 smart-contract blockchain that has been competing with Ethereum has become the recent buzz. The chain has grown rapidly and has gained immense hype during the 2020-2021 bull market. Many venture capitalists have talked about bitcoin being profitable. There is a recent departure of major projects to the other chains. A massive drop in the total value of the Solana chain has raised a lot of questions about prospects.
The Technological Challenges Are The Reason For Solana’s Downfall
Lingering technological challenges have become the prime reason for the downfall of Solana. This was cited by doubters as the competition from Ethereum layer 2s has posed a big threat to Solana’s core premises. The faster and lower-cost transactions of the coin have raised concerns. The biggest shading of Solana’s sunshine is the recent fall of Sam Bankman-Fried, who is the founder of the FTX exchange and hedge fund Alameda Research.
Bankman-Fried was the single most prominent backer of Solana. He would reasonably argue that the price appreciation of Solana has resulted in various related assets from 2020-2021. This was driven in during the part of the Bankman-Fried’s market interventions and advocacy.
The consequences of growing Solana skepticism have become dire, especially during the declining numbers. The currency reached the peak price of $258.78 on Nov. 6, 2021. Solana’s SOL token has declined by over $10. This is a huge drop of 96%, and was sharper than the drawdown from peak 74.5%) and ETH (-74.6%). The currency saw a sharp drop, and dogecoin (DOGE) saw a bear market. This meme coin was down to a mere 76% from its October 2021 local high.
Solana has lost its fifth-most valuable crypto token last year in November. Solana’s SOL token has dropped to 19th place. The latest data revealed by CoinGecko has shown a serious depreciation in the rank of the coin.
Sharpest Drop In Solana Metrics In November
Solana saw the sharpest percentage drop in early November. The collapse of FTX and the mounting evidence of the fraud done by Sam Bankman-Fried resulted in the drop in the rank of Solana. It now seems likely that Bankman-Fried’s extensive support for the blockchain had been funded via FTX’s wholesale theft received by the customer funds.
Former Alameda executives that include CEO Caroline Ellison, have claimed in their recent statements that Bankman-Fried has encouraged market manipulation of the FTX’s FTT token. It also seems that it seems improbable that Bankman-Fried was not able to manipulate the prices of Solana-based projects. Fried has controlled large stakes and has been using the accounting and loan fraud that forms the core of the FTX swindle.
This chaos doesn’t seem to end anymore. Solana is in the death spiral because the developers and projects have departed from the struggling chain. Most dramatically, the DeGods and Y00ts NFT projects have also been confirmed and this has left Solana behind Ethereum and Polygon.
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Lingering Issues Related To Solana
Solana is dripping in rank and this has raised so many concerns about the currency. On top of worries, there is the collapse of FTX. Solana has seen repeated chain halts since its inception. This was often caused by “botting”. Some other forms of spam have also been overwhelming the network. Some things are linked to Solana’s core value proposition as it has become faster, and cheaper as compared to Ethereum. For a blockchain, where there is a lower transaction its costs can get higher. There is a trade-off that can offer security and stability.
Moreover, that value proposition has also been less compelling and this is when Solana launched in March 2020. Over the years there has been significant growth in “layer 2” products on Ethereum. This has offered faster and less expensive transactions for Solana. This resulted in the benefit of Ethereum’s security, as most currencies have been using the “roll-up” technology. There have been some competitors for Solana that include: Optimism, which is a layer 2. It was launched in December 2021 and has gained twice as much value as Solana.
These are serious concerns around Solana in the crypto industry. There is also a lot of debating on the chain’s prospects in recent days. In a best-case scenario, this currency remains at an all-time low. Solana builders have faced a long road back and are a serious threat to the ecosystem’s health and relevance. The big question is whether there are enough competitors that can beat the position of Solana.