What exactly is the situation with Solana (SOL)?

Solana (SOL) has undoubtedly been harmed by the demise of FTX and Alameda. The once-dominant cryptocurrency asset in terms of market capitalization has fallen to 17th place, and this slump may continue well into 2023.

Solana FUD

Solana (SOL) had a strong run last year and was one of the highest performing coins during the 2021 Bull Run. However, after the Sam Bankman-Fried swindle was uncovered, its value has dropped by more than 70%.

As it turned out, Sam Bankman-Frien was deliberately inflating Solana’s ecology, resulting in an essentially fictitious development and a…bubble in the price of SOL. SOL was held by FTX for $982 million, and it was also the second largest holding of FTX’s sister business, Alameda Research.

Solana has now lost more than 95% of its value since its all-time high in November. Even the most steadfast investors have been shocked by the enormous and immediate decline in the value of SOL.

We remind you that Solana’s ecosystem was dubbed a “Ethereum killer,” implying that it was regarded as the greatest threat to Ethereum’s dominance.

It is being abandoned by developers.

Solana’s development activity is drastically decreasing, according to statistics from cryptocurrency monitoring company Santiment. The network no longer serves any purpose for developers.

Furthermore, Token Terminal statistics revealed that the number of active blockchain developers has decreased from 3,700 at the start of the year to roughly 1,600 in December. Solana’s developer count was around 2,553, but the network has now shrunk to just 76.

As if that weren’t enough, two of Solana’s leading NFTs projects, DeGods and y00ts, have announced their departure from the network in favor of Ethereum and Polygon, respectively, adding to Solana’s troubles.

Drops locked in value

The entire value locked in SOL (TVL) on the Solana blockchain follows a similar pattern, falling by 28% since November 6 from 27.2 million to 18.93 million. This could imply that the reduction in TVL is not solely attributable to declining cryptocurrency prices, but rather to consumers withdrawing their assets from DeFi.

Meanwhile, the supply of Solana stablecoins has been significantly reduced in recent weeks, with their market worth falling by around 50% since November 6, from $3.9 billion to $1.8 billion.

The… bosses are unconcerned.

Nonetheless, Solana co-founders Anatoly Yakovenko and Raj Gokal believe this downturn is very temporary.

The following events, according to the two executives, will be important for the network’s ability to continue forward:

“I believe it will be really beneficial in the long run. We’ve always gotten unfavorable feedback concerning FTX’s involvement in our ecosystem and pooling of ownership stakes. As a result, these advances are like to pulling off a Band-Aid.”

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