The Solana ecosystem is showing signs of a promising future in the midst of a volatile crypto market, according to its founders Anatoly Yakovenko and Raj Gokal.
Electric Capital’s recent Developer Report showed that the number of developers on Solana has risen 83% from a year ago to over 2,000, making it second only to Ethereum in terms of raw developer numbers.
Surviving the Crypto Winter
Yakovenko and Gokal started Solana in late 2017 with the vision of creating a future that prioritizes fair access to finance, freedom, and security through blockchain technology. The mainnet was launched in beta less than three years ago, and since then the Solana ecosystem has continued to grow and evolve.
Despite the reputational damage to the crypto industry as a whole in 2022, the team of developers behind this project remain committed to core tenets of decentralization, self-sovereignty, and fairness. The number of validators on the Solana network has increased, with over 2,000 nodes now running the blockchain. Performance upgrades have also been implemented and scheduled to allow for a more stable and efficient network.
According to Yakovenko and Gokal, the principles of web3, such as decentralization and self-custody, are essential for a decentralized future. They believe that decentralized finance is disrupting the traditional financial models at a rapid pace, and the only way to truly embrace the promise of web3 is to have an uncompromising commitment to those principles.
Solana founders maintain that the crypto community can be seen as an example of antifragility, a concept that suggests that attacks on a system can have the unexpected effect of making it stronger. In the same way, they believe that bear markets can also have a similar impact, and Solana is no exception.
Work on Network Outages
Solana experienced several network outages in 2022 that caused downtime and disrupted the network’s ability to process transactions. These were caused by a variety of factors, including high demand for transactions, technical issues with the network, and security breaches.
The constance downtimes have negatively impacted Solana’s reputation as a reliable and trustworthy platform, causing some investors to question its stability and security. This led to a decline in confidence in the platform, causing some investors to sell their holdings and refrain from investing in the platform.
Yakovenko and Gokal affirmed that a validator client developed by a third-party organization, Firedancer, is set to significantly reduce the risk of network outages. With the capability to process 0.6 million transactions per second in a testing environment, the introduction of this new validator client could help transition the network out of beta and into a more stable state.
A Disastrous 2022
Sam Bankman-Fried, former CEO of Alameda Research, was among the many who touted Solana as one of the most underrated cryptocurrencies last summer. However, since the collapse of crypto exchange FTX, the token’s market value has plummeted.
SOL currently trades around $24, down over 90% from its November 2021 all-time high of $260, and another correction could be on the cards.
The Solana ecosystem has been hit hard as a result of FTX’s collapse. The Foundation team released a blog post explaining the financial ties between Solana and Bankman-Fried’s empire.
It highlighted the fact that FTX and Alameda had purchased over 50.5 million SOL tokens, worth approximately $500 million, that would remain locked until 2028. It also revealed that around $1 million in cash or assets sitting on FTX as of Nov. 6, 2022, the day the crypto exchange had to pause customer withdrawals due to liquidity shortages.
The fate of these holdings is currently unclear during FTX’s bankruptcy proceedings.
It is worth noting that in recent weeks, two of the top NFT collections on the Solana blockchain, DeGods and Y00ts, announced they would be migrating to other blockchains, such as Ethereum and Polygon, respectively.
The rapid depreciation in the value of the network and the constant outages raises questions about the blockchain’s stability and the future of decentralized exchanges like Serum that Bankman-Fried built. Despite Yakovenko and Gokal’s confidence in Solana, it remains to be seen if SOL will recover from its recent slump.
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