- Financial ties with FTX highlighted; Solana Foundation held significant assets in the now-defunct exchange, impacting ecosystem stability.
- Transaction activities on Solana surged by 128% from September this year, showcasing strong recovery and community confidence.
In the wake of the FTX collapse in late 2023, the Solana network has demonstrated remarkable resilience, rebounding to surpass pre-collapse activity levels, as per a report by Brazilian investment firm Hashdex . This resurgence marks a good recovery for Solana, shedding the burdens of the past associated with the fallen exchange.
Solana’s Resurgence Post-FTX Collapse
Despite the critical role FTX played within its ecosystem, Solana’s recovery is a testament to its robustness and the continued confidence of its community and investors. By late 2023 and early 2024, on-chain activity, measured by transaction numbers, not only returned to levels seen before the FTX collapse but exceeded them.
Source: Hashdex Following a 53% drop in mid-2022, transaction activities surged by 128% from September this year, underscoring a robust resurgence in network engagement.
Understanding Solana’s Relationship with FTX
The financial ties between Solana and FTX were substantial. Solana Foundation had disclosed that it had one million dollars in cash and other assets tied up in FTX, which became inaccessible post-bankruptcy.
Additionally, holdings included 3.24 million shares of FTX Trading Ltd, along with significant amounts of FTT and SRM tokens, which are linked to the affiliated decentralized exchange project, Serum.
From 2021 to 2022, FTX and Alameda Research significantly invested in Solana’s native cryptocurrency, SOL, buying up 50.5 million tokens. This investment made Solana one of the key assets promoted by Sam Bankman-Fried’s platform, setting high expectations for its growth and utility.
Impact of the FTX Crisis on Solana
The downfall of FTX on November 11, 2022, initiated a harsh crypto winter, severely impacting Solana’s market value and ecosystem. Sam Bankman-Fried , faced allegations of misappropriating over $8 billion of customer funds, leading to substantial financial losses across the board.
Solana’s Price Recovery and Market Activity
Despite the tumultuous events, SOL’s price has climbed significantly from a low of $12 at the beginning of 2023 to $155, though it still remains 40% below its peak of $260 achieved in November 2021. This recovery in price and confidence highlights the ongoing support and belief in Solana’s potential and resilience.
Factors Contributing to Solana’s Revival
A notable recovery in the volumes on decentralized exchanges (DEX) within the Solana network is a significant indicator of this revival. After experiencing a drop, DEX volumes on Solana surged, closing the third quarter of 2024 with an increase of over 5,261% compared to the previous 12 months.
Source: Hashdex Community engagement initiatives like airdrops have spurred participation and adoption, while the rise of memecoins has broadened user engagement, enhancing Solana’s visibility in the crypto market.
Furthermore, the growth of the decentralized finance (DeFi) ecosystem on Solana has been instrumental. The expansion of DeFi applications and services has not only enhanced the network’s utility but has also attracted developers and users alike, cementing Solana’s position as a dynamic and growing ecosystem in the blockchain space.
