Solana’s market cap shrinks below Litecoin in prolonged descent

The market cap of the popular proof-of-stake blockchain, Solana, fell below the market cap of the OG proof-of-work blockchain, Litecoin, according to Coingecko.

Once dubbed the “Ethereum Killer,” Solana’s 2022 SOL token began trading at $178.89, with a market capitalization of $55.09 billion in January 2022. Then came the crypto winter, the merger that led to Ethereum—the once proof-of-work blockchain – the switch to proof-of-stake, and the fallout from the collapse of the cryptocurrency exchange FTX. Now SOL trades for $11.91 with a market value of $4.32 billion, a drop of 94.9% for the year.

Solana is a proof-of-stake layer-1 blockchain that allows developers to create decentralized applications, or dapps, and non-fungible tokens, better known as NFTs.

Compare this to Litecoin, which began trading in 2022 at $151.09 with a market cap of $10.47 billion. Fast forward to November 22, 2022, and Litecoin is trading at $69.36 with a market cap of $4.97 billion, a drop of 69.1%.

Solana’s latest downfall began with the collapse of FTX. On Nov. 14, days after FTX filed for Chapter 11 bankruptcy protection, attention turned to the Solana Foundation’s exposure to the failed exchange — including about $1 million in cash or cash equivalents on FTX.com as of Nov. 6, when FTX. com stopped processing withdrawals.

“This is less than 1% of the Solana Foundation’s cash or cash equivalents, and as such, the impact on Solana Foundation operations is negligible,” the Solana Foundation noted in a post.

But FTX had a significant amount of SOL at the time of the collapse: $982 million worth of SOL on Nov. 10, according to Forbes and Financial Times.

“We’re not sure how many clients SOL was at FTX,” Solana Foundation Communications Manager Austin Federa told me. Decrypt. “But the Foundation had less than $1 million on FTX, Solana Labs had nothing.”

FTX, along with its founder and former CEO Sam Bankman-Fried, has long been associated with Solana, having participated in a $314 million fundraising by Solana Labs through Alameda Research.

Undeterred by the current downturn, the Solana community is still rallying around the controversial blockchain and token. “The community’s resolve has been very strong, it’s a pleasure to see,” Federa said.

“We launched in 2020 after the markets crashed and the world went into lockdown – chewing gum is in our DNA and we’ll get through it together,” tweeted Solana founder Anatoly Yakovenko on November 9, 2022.

In a case of “not aging,” a tweet from the former billionaire has come back to haunt Bankman-Fried. In January 2021, he promised to buy an investor’s entire SOL position when Solana was at $3 per coin. “Sell me all you want. Then go,” he said.

Almost two years later, with FTX token FTT trading at $1.30 at the time of writing, the investor — who goes by @CoinMamba on Twitter — had the last laugh.