ADVERTISEMENT
  • Contact
  • Home
Friday, September 22, 2023
  • Login
No Result
View All Result
ADVERTISEMENT
Crypto News
  • Home
  • Articles
    • News
    • Analysis
  • Home
  • Articles
    • News
    • Analysis
No Result
View All Result
Crypto News
No Result
View All Result
Home News

Lost SOL? Persistent challenges continue to impact Solana price

by admin
May 20, 2022
in News
0
0
SHARES
258
VIEWS
Share on FacebookShare on Twitter

The past thirty days have been an extremely bearish time for cryptocurrencies. The sector’s aggregate market capitalization plunged 33% to $1.31 trillion and Solana’s (SOL) downfall has been even more brutal. Currently, SOL has seen a 50% correction and trades at $51.

Solana/USD price at Coinbase (blue) vs. altcoin capitalization (orange). Source: TradingView

The network aims to overcome the Ethereum blockchain’s scalability problem by incorporating a proof-of-history (PoH) mechanism into a proof-of-stake (PoS) blockchain. With PoH, Solana delegates a central node to determine a transaction time that the entire network can agree on.

The low fees delivered by the Solana network have enticed developers and users alike, but the frequent network outages continue to cast doubt on the centralization issue and it has likely scared away some investors.

Pinning the underperformance exclusively to the 7-hour network outage on April 30 seems too simplistic, and it doesn’t explain why the decoupling started a month earlier. According to Solana Labs, the issue was caused by bots initiating numerous transactions on Metaplex, a nonfungible token (NFT) marketplace built on Solana.

The transaction volume surpassed six million per second during its peak, overflowing individual nodes and as a consequence, validators ran out of data memory which led to a loss of consensus and network interruption.

To mitigate the issue, developers introduced three steps: a change in the data transfer protocol, stake-weighted transaction processing and “fee-based execution priority.”

TVL and the number of active addresses dropped

Solana’s main decentralized application metric started to display weakness earlier in November after the network’s total value locked (TVL), which measures the amount deposited in its smart contracts, repeatedly failed to sustain levels above 60 million SOL.

Solana network Total Value Locked, SOL. Source: Defi Llama

However, the 50% price correction has other factors than just a reduced TVL. To confirm whether DApp use has effectively decreased, investors should also analyze the number of active addresses within the ecosystem.

Solana dApps 7-day on-chain data. Source: DappRadar

May 18 data from DappRadar shows that the number of Solana network addresses interacting with the top-7 decentralized applications dropped, except for the DEX exchange Orca. The reduced interest in Solana DApps was also reflected in SOL’s futures markets.

Solana futures aggregate open interest. Source: Coinglass

The above chart shows how Solana futures open interest declined by 22% in the past month to the current $510 million. That is especially concerning because a smaller number of futures contracts might reduce the activity of arbitrage desks and market makers.

SOL is likely to experience more pain

It’s probably impossible to pinpoint the exact reason for Solana’s price drop, but centralization issues after multiple network outages, a decrease in the network’s DApps use and fading interest from derivatives traders are three factors contributing to the decline.

The data reviewed in this article suggests that Solana holders should not expect a price bounce anytime soon because the network health metrics remain under pressure. There’s no doubt that Solana Labs has been working to reduce its dependence on the networks’ validators, but at the same time, investors want to avoid centralized projects.

Should the sentiment start to improve, there should be an inflow of deposits, increasing Solana’s TVL and the number of active addresses. As long as these indicators continue to deteriorate, there’s no way to predict a price bottom for SOL.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Source link

Previous Post

What is Sorare and how to play it?

Next Post

Swiss think tank urges greater global cooperation on crypto regulation

admin

admin

RelatedPosts

SEC sues Do Kwon, Paxos ready to litigate, SBF’s VPN: Hodler’s…

SEC sues Do Kwon, Paxos ready to litigate, SBF’s VPN: Hodler’s…

by admin
February 18, 2023
0

Top Stories This Week Paxos ‘categorically disagrees’ with the SEC that BUSD is a security The United States Securities and...

Bitcoin price rally to $25K followed by total crypto market cap retest of the $1.13T resistance

Bitcoin price rally to $25K followed by total crypto market cap retest of the $1.13T resistance

by admin
February 17, 2023
0

The total crypto market capitalization rejected at $1.13 trillion on Feb. 16, but there was no change in the month-long...

Terra lawsuit a ‘roadmap’ to attack other stablecoins: Delphi Labs

Terra lawsuit a ‘roadmap’ to attack other stablecoins: Delphi Labs

by admin
February 17, 2023
0

The United States Securities and Exchange Commission’s (SEC's) lawsuit against Terraform Labs and its co-founder Do Kwon could be seen...

Binance mints 50M TrueUSD days after Paxos ordered stop issuing BUSD

Binance mints 50M TrueUSD days after Paxos ordered stop issuing BUSD

by admin
February 17, 2023
0

Only days after reports of United States regulatory scrutiny of Paxos and Binance USD (BUSD), cryptocurrency exchange Binance has minted...

$24K Bitcoin — Is it time to buy BTC and altcoins? Watch Market Talks live

$24K Bitcoin — Is it time to buy BTC and altcoins? Watch Market Talks live

by admin
February 16, 2023
0

In this week’s episode of Market Talks, Cointelegraph welcomes Michaël van de Poppe, a full-time day/swing trader in cryptocurrencies based at...

Tether market cap nears $70B as SEC crypto crackdown hurts stablecoin rivals

Tether market cap nears $70B as SEC crypto crackdown hurts stablecoin rivals

by admin
February 16, 2023
0

The U.S. Securities and Exchange Commission (SEC) wants to sue Paxos for issuing and listing stablecoin Binance USD (BUSD) to...

Next Post
Swiss think tank urges greater global cooperation on crypto regulation

Swiss think tank urges greater global cooperation on crypto regulation

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

3 × two =

  • Trending
  • Comments
  • Latest
Bitcoin price drops under $29K as Walmart, Target stock lose most since 1987

Bitcoin price drops under $29K as Walmart, Target stock lose most since 1987

May 19, 2022
What’s left in Luna’s reserve wallet?

What’s left in Luna’s reserve wallet?

May 19, 2022
Lost SOL? Persistent challenges continue to impact Solana price

Lost SOL? Persistent challenges continue to impact Solana price

May 20, 2022
Socios fan tokens rally 40%+ after Chiliz rolls out mainnet upgrade and token burn plan

Socios fan tokens rally 40%+ after Chiliz rolls out mainnet upgrade and token burn plan

May 19, 2022
Bitcoin price drops under $29K as Walmart, Target stock lose most since 1987

Bitcoin price drops under $29K as Walmart, Target stock lose most since 1987

1
Edward Snowden reveals he was one of six who helped launch Zcash

Edward Snowden reveals he was one of six who helped launch Zcash

0
Price analysis 4/27: BTC, ETH, BNB, XRP, SOL, LUNA, ADA, AVAX, DOGE, DOT

Price analysis 4/27: BTC, ETH, BNB, XRP, SOL, LUNA, ADA, AVAX, DOGE, DOT

0
Synthetix (SNX) rallies in anticipation of L2 Curve Wars and Optimism airdrop announcement

Synthetix (SNX) rallies in anticipation of L2 Curve Wars and Optimism airdrop announcement

0
SEC sues Do Kwon, Paxos ready to litigate, SBF’s VPN: Hodler’s…

SEC sues Do Kwon, Paxos ready to litigate, SBF’s VPN: Hodler’s…

February 18, 2023
DeFi security: How trustless bridges can help protect users

How trustless bridges can help protect users

February 18, 2023
The economics of cryptocurrency mining: Costs, revenues and market trends

Costs, revenues and market trends

February 18, 2023
Bitcoin price rally to $25K followed by total crypto market cap retest of the $1.13T resistance

Bitcoin price rally to $25K followed by total crypto market cap retest of the $1.13T resistance

February 17, 2023
  • Bitcoin price drops under $29K as Walmart, Target stock lose most since 1987

    Bitcoin price drops under $29K as Walmart, Target stock lose most since 1987

    0 shares
    Share 0 Tweet 0
  • What’s left in Luna’s reserve wallet?

    0 shares
    Share 0 Tweet 0
  • Lost SOL? Persistent challenges continue to impact Solana price

    0 shares
    Share 0 Tweet 0
  • Socios fan tokens rally 40%+ after Chiliz rolls out mainnet upgrade and token burn plan

    0 shares
    Share 0 Tweet 0
  • What is P2P trading, and how does it work in peer-to-peer crypto exchanges?

    0 shares
    Share 0 Tweet 0

Categories

  • Analysis
  • News

© 2022 Crypto News .

No Result
View All Result
  • Home
  • Articles
    • News
    • Analysis

© 2022 Crypto News .

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In