No blockchain than Solana has been hit harder by the FTX Fallout, is the end imminent or could it make a comeback?

Over the past 2 years, the Solana network has rapidly risen to be one of the largest blockchains both in terms of market capitalization and usage. The growth was largely driven by Sam Bankman-Fried who was both a massive investor and the voice of the entire ecosystem. FTX and Alameda were connected to Solana in 4 ways,

• The SOL token
• Solana DeFi
• Ecosystem investments
• Parts of Solana’s treasury

FTX & Alameda held nearly 58.08 million SOL tokens, or 11% of the total supply. Meanwhile, the SOL price has fallen more than 50% in the last seven days, but it is not clear how much of this has been dumped by FTX compared to the other investors.

Apart from SOL, Solana DeFi has also been hit hard as TVL has declined from $10.17 billion in November to $327 million currently. Next to Serum, top DEX on Solana launched by SBF also coincided strongly with other projects like Magic Eden & Phantom.

Mainly, a critical problem with Solana DeFi is its wrapped token assets. SoBTC and soETH dumped heavily as they were both supported by security on FTX. Finally, the Solana Foundation had some direct treasury exposure to FTX. They have $1M in assets committed to FTX before withdrawals were paused. They also have 3.24 million common shares in FTX trading and 3.43 million in FTT. Unfortunately, both are heading towards $0.

The after effects of the impact!

In a recent update, Tether announced the move of 1 billion USDT from Solana to Ethereum without changing its total supply.

Tether said it will conduct a chain swap to move 1 billion USDT from Solana to Ethereum to reduce the total amount of circulating supply on Solana. Binance had previously suspended USDC and USDT from Solana, but quickly reinstated them, while Okex removed both on Solana and stopped accepting deposits and withdrawals. Meanwhile, Circle confirmed normal functioning of the USDC at Solana.

Will Solana jump back or left to meet the end?

The situation for Solana is undoubtedly extremely bad at the moment. However, that doesn’t definitively mean it’s time to write off Solana. Here are the possible reasons why the network may bounce back nicely.

• Large treasury
• Strong developer community
• Flourishing NFT ecosystem
• High network activity

All in all, we are still in the early stages of cryptocurrency, so it is too early to predict whether the Solana ecosystem will die or not. The SOL price and the entire ecosystem can be revived the same way Ethereum did back in 2018.