Solana Ecosystem Hardest Hit by FTX Bankruptcy

UTC by Babafemi Adebajo · 2 min read
Solana Ecosystem Hardest Hit by FTX Bankruptcy
Photo: Unsplash

Despite the reassurances, the bleeding of SOL has not stopped as SOL continues to dive.

Days after FTX declared bankruptcy, the market continues to react to the collapse of the centralized exchange. While the entire market has been hard hit, emerging reports suggest that the Solana ecosystem has been the hardest hit.

According to Reuters, over 190 billion dollars has been lost by the crypto market in the last seven days. So far, Ether has dropped by 20%, while Bitcoin has lost 19% of its value. Comparatively, Solana (SOL) has dropped by 53.8% since the case against FTX began to unfold on Nov. 2. SOL’s market capitalization now rests at around $5.1 billion from $11.6 billion.

Solana Co-founder, Anatoly Yakovenko, has tweeted that Solana Labs didn’t have any assets on FTX and had enough financial capability to stay afloat for 30 months. Solana Foundation also revealed that its balance sheet exposure to FTX was less than 1% of its cash or cash equivalents. Also, the largest DeFi projects on Solana had little or no exposure to FTX according to the Solana Foundation.

Despite the reassurances, the bleeding of SOL has not stopped as SOL continues to dive.

NFT Trading Volume Spikes

Since the FTX bankruptcy, NFT trading volume spiked by $13 million. Particularly, Solana-based marketplaces, Magic Eden, OpenSea, and Solanart have seen significant increases in NFT trading volume. The value of traded Solana daily moved up from 80,000 to over 250,000 Solana.

Despite the increase in trading volume, NFT prices continue to slide. This suggests that NFT traders were offloading their assets as against holding them because of the FTX incident. There are also suggestions the increase was because users tried to bypass the freeze on withdrawals by purchasing NFTs and then getting their money back by selling the NFTs.

Is this the end of the Solana Ecosystem?

According to Adam Struck of Struck Capital, this will not be the end of the Solana ecosystem. Alex Tapscott, managing director at Ninepoint Partners, believes Solana may survive based on the merits of the technology and its community.

In his own opinion, Jack Saracco, co-founder of Ping, believes it’s for the best that Solana ends its connection with the FTX empire now. He, however, acknowledged that the short-term result may cause some pain.

Whatever the case, SOL will remain volatile in the interim.

Altcoin News, Blockchain News, Cryptocurrency News, News
Related Articles