The link between the price of Solana (SOL) and the former crypto exchange platform FTX was dictated greatly by the large investments made by Sam Bankman Fried during the bullish 2020/2021 market.
After the advent of the bear market, but more importantly the collapse of one of the most important exchange platforms related to Solana’s blockchain, a debate has raged regarding the future of Solana’s smart contract layer blockchain.
It is difficult to contend with competition from Ethereum upgrades; the technological development of other blockchains could make Solana obsolete. But the biggest concern for Solana’s future is the connection with former FTX CEO Sam Bankman Fried.
Price of Solana crypto drops more than it should because of FTX collapse
Going back to 6 November 2021, we can see the numbers of Solana (SOL) reaching its high of $258.78. It can be assumed that Sam Bankman Fried, having been a big supporter of blockchain, drove, at least in part, the token’s price growth by intervening in the market and advocating for the blockchain platform on social media.
Taking a look at today’s numbers, the situation for Solana looks very critical indeed. It seems that the blockchain’s token, has been hit much more than the others, from the maximum price of $258.78, SOL has dropped to just over $10. A much sharper drop than Bitcoin, Ethereum or Dogecoin, specifically we are talking about a drop of about 96%.
Referring instead to the total value of tokens staked in Decentralized Finance (DeFi) protocols, the drop is even more drastic. Solana has dropped from a high of $10.2 billion to less than $210 million. Solana can currently be found in 12th place in the ranking of DeFi chains.
Looking back, if you are wondering which event has caused Solana and its SOL token to suffer a sharper decline, it is not a surprise. After the collapse of FTX and the unmasking of Sam Bankman Fried, the price of SOL experienced a sharp drop. The probability that SBF’s support for Solana powered the blockchain with funds stolen from FTX customers is indeed high.
After the statements made to the SEC by various Alameda executives, it is clear that Sam Bankman Fried was manipulating the prices of FTX’s FTT token. So, it does not seem unlikely that the founder of FTX was also manipulating the prices of Solana-based projects using funds stolen from customers.
Solana is not in a good position. All related projects such as the Serum exchange, DeFi service Oxygen (sometimes referred to as “SamCoins”), have bottomed out and some have declared bankruptcy after FTX’s collapse.
Not everyone thinks Solana can withstand this blow. The significant growth of Layer 2 products such as Ethereum and many others allow for faster and more secure transactions than Solana. There is hope for Solana, but it will have to be followed by a lot of work by all blockchain employees.
Solana’s most important NFT projects are moving to Ethereum and Polygon
It’s raining cats and dogs for Solana’s blockchain, which after suffering the drastic declines due to the connection with FTX’s platform collapse and the indictment of its founder Sam Bankman Fried, does not stop receiving bad news. Two of the most important NFT projects hosted in the Solana ecosystem are shifting their horizons to the Ethereum and Polygon platforms.
The two projects in question are DeGods, which has decided to link its NFT project to Ethereum, and y00ts, which has decided to migrate to Polygon. For both, the announcement was made on 26 December on Twitter.
The trading volume for the past 30 days of both projects, according to OpenSea’s market analysis, is about $18 million. This makes the projects the most profitable on Solana, thus a big loss for the platform.
The creator of both NFT projects, Rohun Vora, tweeted a video on 26 December in which he spoke out about the issue:
“Dear Solana community, thank you. The support of this community has meant the world to us. Thank you for putting us on the map. We could not have done any of this without you. – Then he goes on to say -We have come to the conclusion that in order to grow we need to explore new opportunities. We believe that now is the time to take a calculated risk to embark on a new journey. After all, the biggest risk is not taking one.
Details of the bridge will be released when this is ready and tested. This has never been done before on this scale – the two project teams tweeted – we want to make sure it is airtight.”
The blow of the loss of these two major NFT projects is clearly related to its market declines. As we have already analyzed further back, the drastic drop also linked to the collapse of FTX made Solana very vulnerable, as well as causing it to lose a lot of value.
However, according to some as yet unconfirmed sources, there would be a financial deal behind the migration of the two NFT projects, but developer Rohun Vora has firmly denied it. In fact, rumors say that the DeGods project team allegedly asked Solana for $5 million to stay on its platform, while Polygon allegedly paid the y00ts project an as-yet undisclosed amount to have it abandon ship.