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Several Solana-based DeFi protocols started unplugging from Serum as they weren’t sure who wielded absolute control over it.
Within 24 hours of the crypto exchange FTX declaring bankruptcy last Friday, November 11, a hacker made unauthorized withdrawals worth more than $467 million from the exchange. Soon after, Solana developers initiated a hard fork for Serum, a liquidity infrastructure hub built by FTX. Several Solana developers believe that the hack on FTX must have compromised Serum as well. On Saturday, November 13, Solana founder Anatoly Yakovenko confirmed that developers are rushing to fork Serum’s code.
Liquidity Hub Serum Forked
Project Serum has been the pillar of Solana’s DeFi infrastructure. But with the trust in FTX falling pretty fast, Serum’s liquidity engine has also started running dry. Also, several Solana-based DeFi protocols started unplugging from Serum as they weren’t sure who wielded absolute control over it.
Last Friday itself, a pseudonymous developer Mango Max confirmed a “verified build of the same version has been made and deployed. Additionally, they have also upgraded the authority and fee revenues which are now managed by a multi-sig controlled by a team of trusted developers. Mango Max added:
“The serum program update key was not controlled by its own organization, but by a private key connected to FTX. At this moment no one can confirm who controls this key and hence has the power to update the serum program, possibly deploying malicious code”.
Solana co-founder Anatoly Yakovenko also added:
“Afaik, the devs that depend on serum are forking the program because the upgrade key to the current one is compromised. This has nothing to do with SRM or even Jump. A ton of protocols depend on serum markets for liquidity and liquidations”.
Amid all these developments, the price of Serum’s native SRM has also collapsed. SRM is currently down more than 25% and trading under $0.20. In the last seven days, SRM lost 70% of its value.
Solana (SOL) Comes Crashing Down
As the FTX crisis unfolded, the Solana (SOL) cryptocurrency faced a massive blow. Over the last week, the SOL price tanked by 60% hitting its new 2022-low under $13 earlier today. Amid the recent price crash, the SOL price has come down crashing by over 90% year-to-date.
The reason behind the SOL price crash is that FTX/Alameda was a huge backer of the blockchain project Solana. They were holding around $1.2 billion worth of SOL before the crisis unfolded. As the price of FTX tokens collapsed, they sold more and more SOL and used the money to protect against any further fall of FTX tokens.
ANOTHER 6.6 MILLION #SOLANA ($93,610,892) TO BE UNSTAKED AND DUMPED IN 24 HOURS
— That Martini Guy ₿ (@MartiniGuyYT) November 13, 2022
Amid the ongoing chaos and SOL’s price crash, Solana’s DeFi total-value-locked (TVL) also came crashing down by 50% over the last week. This is not a good sign considering DeFi is the major driver of Solana’s network activity. However, Solana (SOL) could face further price correction as unstaking of a massive number of SOL could happen in the next 24 hours.