Solana Price Dips 10% as Network Experiences Extended Outage

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In Brief
  • The Solana network experienced intermittent stability on 14 September 2021.

  • Transaction volume and bot activity on Solana’s network caused a memory consumption issue, which required a network restart.

  • This caused the price of SOL to decrease dramatically on Friday, 17 September.

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Solana’s (SOL) price as of Friday, 17 September 2021, dropped 10% to $135.25, following its recent rally and all-time high on Sep. 9, due to issues surrounding network stability amidst a flood of transactions.

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Market Value drops to $20B

In a recent week of technical challenges for Solana engineers, SOL price dropped to $135.25 on Friday, 17 September 2021.  Transaction throughput reached a peak of 400000 transactions per second, which caused the network to start forking, resulting in increased memory consumption. This caused some nodes to go offline. It was reportedly a Layer 1 fault, which occurred for approximately 17 hours. The network was successfully restarted by engineers and all nodes are back online, as of 16 September 2021.  Solana said it will continue to implement fixes, and promised to give a detailed report on the outage in the ensuing weeks.

Losses pale in comparison with 2021 gains

The drop in the price of SOL since the Solana network failure saw Ethereum prices increasing by 4%.  However, SOL has performed significantly better in 2021 with respect to gains; it has seen an approximately  7800% gain, compared to Ethereum’s 370%. Only recently, the SOL price crossed the $50B mark. This has been a hallmark of altcoin growth this year, with the likes of Binance Coin and Ada also seeing significant growth.  

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Still early for fast, scalable blockchains

Some experts have pointed to Ethereum’s initial rollout having similar problems, and as such see this as a learning curve for other smart-contract based blockchains. Kyle Samani, a managing partner at Multicoin Capital, sees Solana’s network as a strong competitor to Ethereum, despite its teething problems. Solana is a smart-contract based blockchain, supporting decentralized finance and applications. 

Solana’s incorporation of smart contracts have helped it to take advantage of the surge in the NFT markets. Cardano is also competing in this space having recently upgraded its network to support smart contracts, using the Plutus language.

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