decrypt.co
Nearly every major cryptocurrency is in the red this week after crypto exchange FTX revealed its liquidity crunch—and it’s getting worse now that Binance has opted not to rescue the firm. And outside of FTX’s own FTT token, no top crypto is taking it harder right now than Solana.
Solana (SOL) has fallen 60% over the last seven days to a current price of under $13 per token, according to data from CoinGecko, including a 45% plunge over the past 24 hours.
Since news of FTX's liquidity issues broke on Tuesday morning, Solana has lost over half of its value—about 57%. Now key founders of the blockchain network are attempting to salvage fading enthusiasm around the space as the ecosystem suddenly finds itself embroiled in crisis.
“We launched in 2020 after markets crashed and the world went into lockdown—chewing glass is in our DNA, and we'll get through together,” tweeted Solana co-founder Anatoly Yakovenko earlier today, echoing comments made at last weekend’s Solana Breakpoint conference while highlighting Solana’s recent and upcoming technical improvements.
During an appearance last month on Decrypt’s gm podcast, Yakovenko said that he expected this year’s Breakpoint conference to have a different tone than in 2021, when SOL’s price was skyrocketing. Ultimately, Breakpoint brought a number of major announcements and SOL rose early during the event, but shed those gains on Monday ahead of the FTX bombshell.
The bleeding hasn’t stopped. No cryptocurrency in the top 100 (ranked by market cap) has lost more value this week outside of FTT, which has shed 91% amid confirmation of an FTX liquidity crisis. Binance said Tuesday that it had signed a non-binding letter of intent to acquire FTX, but today revealed that it would not complete the deal due to the extent of FTX’s financial problems.
this crucible moment for @solana ecosystem is as difficult as the last one. the difference is, there are 10x more of us to band together this time. next time, there will be 10x more.
and each time, we're stronger. the fundamentals are better.
same goes for crypto at large, tbh
— raj 🖤 (@rajgokal) November 9, 2022
Raj Gokal, another Solana co-founder, described the FTX fallout earlier today as a “crucible moment” for the ecosystem that is “as difficult as the last one.”
“The difference is, there are 10x more of us to band together this time. Next time, there will be 10x more,” Gokal suggested. “Each time, we're stronger. The fundamentals are better. Same goes for crypto at large, [to be honest].”
Solana has now shed 95% of its value since reaching an all-time high price of $260 this time almost exactly one year ago, when the wider crypto market was hot. This week’s downturn follows months of wider market struggles and macroeconomic pain, and the FTX fallout appears to be taking a toll on builders and investors alike.
FTX and founder and CEO Sam Bankman-Fried (SBF) had long been associated with Solana, having invested in the project through his Alameda Research company. SBF, a billionaire before the FTX collapse, also once famously pledged to buy an investor’s entire stash of SOL when it was still only priced at $3 per coin. “Sell me all you want. Then go fuck off,” SBF tweeted in January 2021.
Yakovenko tweeted today that Solana Labs, the U.S. company that represents the founders and core builders behind the network, had no exposure to FTX. He added that the company’s funds are held in dollars, and that “tons of runway”—about 30 months’ worth based on current burn rate. “Learned our lessons in 2018,” he added, alluding to that year’s crypto market crash.
Still, Solana’s well-known link to FTX and its founder appears to be accelerating its downturn so far this week, and the damage could quickly accelerate. Over 56.3 million SOL—about $729 million worth, at present—is currently set to be unlocked from staking overnight, and a large amount could be dumped onto the market, driving the price down even further.
1/ $ETH holding up remarkably well, while $SOL is forging its soul, purging all but the most committed.
— Chris Burniske (@cburniske) November 9, 2022
Although key players in the space—such as top marketplace Magic Eden—are attempting to motivate and unite builders with positive tweets and affirmations, there’s a lot of uncertainty and fear spreading across the ecosystem. Some are even considering a move away from Solana.
On Tuesday, Frank—the pseudonymous creator behind two of Solana’s biggest NFT projects, DeGods and y00ts—tweeted that he was looking into bridging his collections over to Ethereum. He was quickly criticized by other builders and collectors in the Solana space, and ultimately deleted the tweets, but said that his NFT holders have been asking for such a move.
“Deleted tweets about moving to ETH,” Frank wrote. “Will keep the dialogue open, but I forget sometimes the level of impact my fucking tweets have. No decisions will be made today.”
SOL’s price has only tanked further since then, especially since Binance revealed this afternoon that it would not rescue FTX. The situation may get even worse before it gets any better, based on the impending staking unlock, but Solana leaders are working to maintain hope amongst users and contributors amid a tumultuous situation.