Hit by the collapse of FTX
US COINBASE released a report on the crypto asset (virtual currency) Solana (SOL) on the 22nd. With its differentiated technology base and healthy network activity indicators, Solana is highly likely to reclaim its position as a competitor to Ethereum.
The report mentions the magnitude of the impact Solana received from the bankruptcy of major cryptocurrency exchange FTX and affiliated investment company Alameda Research in November last year. (TVL) noted a 97% decrease.
Solana’s price plummeted due to accelerated capital outflow due to the FTX shock. Major NFT projects such as “Degods” and “Y00ts” announced their withdrawal from Solana and announced that they would switch to other chains.
connection:FTX bankruptcy hurts the Solana ecosystem, prospects for a comeback
Founder Anatoly Yakovenko claims that Solana’s connection to FTX has historically been exaggerated. He explained that the development of the decentralized order book Serum, to which FTX contributed, has since forked and is now being replaced by the community-driven OpenBook.
connection:Newly launched Openbook to close Solana-based DEX “Serum” due to Alameda bankruptcy
In this regard, Coinbase has been greatly affected by market sentiment and its value has declined, but Solana is a “blockchain optimized for high throughput, minimal cost, and native scalability”, which differentiates it. The technical aspects identified will be the basis for future value propositions.
What is Solana
Solana (SOL) is an L1 blockchain that achieves high-speed transactions with its own consensus algorithm “PoH”. Along with Polygon and Avalanche, it is expected to be an “Ethereum killer”. In the past, it has received a lot of funding from Sam Bankman-Fried’s FTX and Alameda.
active network activity
Solana launched in March 2020. In November 2021, it recorded a market capitalization of 10.4 trillion yen ($77 billion) and attracted attention at once. Solana, which offers cheap and fast transactions, has gained a lot of new users as an alternative to the Ethereum blockchain, which has seen transaction fees “outrageously high” during the 2021 bull market.
The report claims that Solana’s activity in terms of transactions and active users on the network “compared to current Ethereum activity.” Specifically, he pointed out that while Solana’s current market capitalization is only about 4.3% of Ethereum’s, the number of daily active users on the network is equivalent to 43.7% of Ethereum’s. (Solana: ~150,000, Ethereum: ~344,000)
Furthermore, when comparing daily transaction volume, Solana handles 17.7 million transactions compared to Ethereum’s 1 million, making Solana 17 times more than Ethereum. Coinbase sees Solana’s apparent low fees as a factor driving user activity, largely due to the technical merits of the protocol.
For Solana to be successful in the long term, it is important to focus on technical capabilities and aim to further differentiate itself from other blockchains, the report said. He argued that a focus on technology differentiation would help Solana attract more developers and drive new user acquisition and network activity.
Given the “relative strength” of the Solana ecosystem in terms of network activity, the report concludes that there is a good chance that Solana will re-establish its leading position in the Layer 1 blockchain space.
Frequent technical troubles
Problems are also emerging.
On the Solana blockchain, a significant transaction delay occurred from the early morning of the 25th. The cause is said to be a problem with block confirmation due to a network upgrade. By 2 a.m., the network had dipped to about 93 transactions per second (TPS), according to data site Solana Explorer. (5000 TPS about 15 minutes ago)
Validators and network engineers suspected a bug in the new code that went online hours ago, but found no obvious bugs, so some validators downgraded to older versions. Within hours the majority followed the procedure. However, it did not solve the performance degradation problem, and eventually restarted the chain by going back to the point just before the fork. (Around 1:28 am on the 26th: Coordinated Universal Time)
While the technical issues did not result in a complete chain outage, Solana has experienced several network outages over the past year. Earlier this year, a software bug caused a PRC endpoint run by the Solana Foundation to go offline.
connection:Solana downtime over 5 hours due to network failure
“There is a good chance that Solana will revive,” Coinbase reports appeared first on Our Bitcoin News.
