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The Solana blockchain suffered another incident that clogged the network and hindered DeFi users from adjusting their collateralized positions.
The latest Solana network issue came amid the ruthless crypto market-wide rout. The outage subsequently allowed XRP to replace SOL as the 7th-largest coin.
XRP Flips Solana
The Solana network went offline last weekend, starting from Friday through Saturday. The network was overwhelmed by a flood of incoming transactions. Solana Founder Anatoly Yakovenko stated that “bots were sending duplicate TXs” hence causing the network to slow and transactions to fail, much to the chagrin of DeFi users.
You see, the market is still bright red as bitcoin tumbles to six-month lows and other coins suffer. The massive correction that started on Thursday has only worsened as days go by. Solana (SOL) plummeted from $144 on early Thursday to a devastating low of $81.21 at the time of publication. Consequently, DeFi users who had borrowed assets from lending protocols such as Soland realized that they had to top up on their loan collateral to avoid liquidations. Unfortunately, they were unable to top up their collateral due to the insane network congestion.
This means most users were liquidated after the network was overwhelmed by transactions generated by bots and they were unable to repay their loans. One user on Twitter going by the monicker Klean lost 500 SOL tokens, for instance.
Solana is currently the biggest loser among the top 20 cryptocurrencies, shaving a further 20.01% from its value over the past 24 hours. SOL is now down more than 68.3% from its November peak of $259.96. Most notably, XRP overtook SOL in market capitalization size. With a market value of $27.32 billion, XRP is currently the seventh-largest cryptocurrency, while SOL is currently at $27.14 billion.
Solana’s Growing Pains
Solana has noticeably gained the support of major investors owing to its perceived scalability, fast processing speed, and relatively low transaction costs. In fact, Bank of America predicted Solana could grab market share from Ethereum and become the “Visa of the digital asset ecosystem”.
Still, the red-hot Ethereum competitor is highly susceptible to network outages. The technical hiccup witnessed over the weekend marks the sixth time the Solana blockchain has suffered an outage over the past three-month period.
HarperCollins’ author Mark Jeffrey said he now has no faith in Solana. He went ahead to liken it to EOS — the network which has so far been a huge disappointment since its eye-popping $4 billion ICO raise. “The fight is now between ETH, BSC, Fantom, Avalanche, and Terra,’ Jeffrey concluded.
Nonetheless, developers of the Solana network are working to fully resolve the persistent outages. The Solana Foundation announced the release of 1.8.14 which would try to “mitigate the worst effects of this issue”. The 1.9 release is presently live on testnet where it is being tested vigorously before rollout. The Solana engineers are also expected to launch more improvements over the next 8-12 weeks.