FTX contagion is spreading to the Solana ecosystem

SOL Solana is down much longer than any of the other major cryptocurrencies today, and they are all down badly after the sudden release of the fast-growing crypto exchange FTX on Tuesday.

Why it’s important: Blockchain principles aim to instantiate the ideals of decentralization. That is, no single points of failure. The realities of Blockchain, however, show that every community tends to its big leaders.

  • For Solana, one of those was definitely the founder of FTX, Sam Bankman-Fried (SBF).

Flashback: SBF has long been bullish on Solana, including working to build Serum, an order book-style exchange that runs in a decentralized manner.

  • His firms are said to have held a large proportion of SOL’s total supply.
Also Read :  LeBron James Calls for Action Against Hate Speech After Elon Musk's Twitter Takeover | News, Scores, Highlights, Stats, and Rumors

What we’re looking at: FTX and Alameda Trading are in trouble. If they have large amounts of SOL, they are very likely to exit those positions, which will drive up the price of SOL.

  • CoinDesk reported on November 2 that Alameda had $292 million in SOL and $863 million in SOL locked (on the Solana blockchain, large holders can earn more by supporting the blockchain’s collectors by pledging not to sell – or lock – for a certain period of time). )
  • “People are already dumping — a self-fulfilling prophecy,” Lisa Jy Tan of Economics Design told Axios on a Twitter DM.
  • Tomorrow, the entities that verify the Solana blockchain have already publicly announced their intention to unlock a billion dollars worth of SOL (at current prices), about 17% of its market cap.
  • It is reasonable to expect that they would intend to sell.
Also Read :  HBKU concludes workshops on innovative entrepreneurship

What they are saying: “People in this industry always like to idolize the big guys,” Molly, founder of Magic Ventures, told Axios on Twitter DM.

  • “I think people should be realistic,” she said. “People always act in the way that benefits themselves instead of others, especially in the capital market.”

In the weeds: The collapse of Solana has put stress on one of the leading decentralized finance applications, Solend, a money market that works much like Ethereum Compounds.

  • Solend is gradually releasing one loan, nearly $30 million USDC (stablecoin), collateralized by SOL, which is rapidly collapsing and trying to sell the protocol.
  • Like the price of SOL, the total value locked (TVL) in various DeFi projects on Solana has fallen much further in the past day than on other smart contract blockchains, according to DefiLlama.
  • Solana TVL is down 45% on the last day, to $470 million, as of Wednesday afternoon, New York time.
Also Read :  Michael Hicks: Economic optimism and worry on Thanksgiving

The other side: “For Solana basically I’m not too worried. While FTX was influential in the early days, the ecosystem is so much bigger than them at this point,” says Chris McCann, an early SOL buyer and partner at Race Capital. Axios over Twitter DM.

Source

Leave a Reply

Your email address will not be published.

Related Articles

Back to top button