The collapse of FTX and its associated entity, Alameda Research, delivered a substantial blow to Solana’s ecosystem.
Alameda, a prominent early participant in Solana, held a considerable amount of Solana’s native SOL token. And other tokens from small-cap ecosystem projects. These included $MAPS from the mapping application Maps.me, $OXY from decentralized prime brokerage Oxygen Protocol, $FIDA from decentralized exchange Bonfida, and $SRM from Serum. In this article, we’ll discover more about Solana’s Status after FTX’s Collapse.
Analyzing Solana After the FTX Collapse
Post-FTX collapse, all these tokens witnessed a significant devaluation, ranging between 50% and 99%, with none reclaiming its pre-FTX valuation.
Source: Kaiko
Despite the adverse effects on its ecosystem, Solana’s native SOL token has demonstrated an impressive recovery throughout the year, notably surpassing $ETH in risk-adjusted terms.
1) Liquidity Challenges for Smaller Tokens
Beyond the price downturn, liquidity for the smaller ecosystem tokens has also suffered a severe setback, lingering between 50% and 80% below the levels observed before the FTX collapse.
$OXY and $MAPS, particularly impacted as over 90% of their token supply was held on FTX, experienced the harshest consequences. $MAPS, in particular, saw its liquidity practically vanish from centralized exchanges. It trades on only a handful of DEXs with scarce liquidity.
Source: Kaiko
Binance continues to dominate as the primary source of liquidity for these tokens, with Kraken emerging as the second-largest market in recent months.
2) Dynamics of SOL
Despite its notable price surge this year, $SOL’s 1% market depth has decreased from $34 million a year ago to approximately $16 million.
Moreover, it’s worth highlighting that in Q3, $SOL’s market depth, both in native units (considering price impact) and USD terms, exhibited an uptick. It suggests heightened interest and increased participation from market makers. Potentially influenced by partnerships with VISA and other positive news events.
Source: Kaiko
The rapid rebound of $SOL underscores the significance of fundamentals, particularly in the post-FTX landscape. Where investors display increased selectivity and risk aversion.
However, it is essential to note that $SOL experienced a dip coinciding with the commencement of the criminal trial of Sam Bankman-Fried, the former CEO of the crypto brand. The frequent mentions of $SOL in the trial proceedings might contribute, at least in part, to the observed dip in its value.
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3) Development Activity
On a yearly basis, Solana ranks 4 in development activity, below Internet Computer, Sushi, and Mina protocol. 400+ community developers contribute to the project, compared to Polkadot (250 community developers).
In a micro view, Solana ranks 6 in developer activity.
Conclusion
Solana is fundamentally strong- Also, development activity is pretty high, and liquidity for ecosystem tokens is improving. The NFT craze has left the Solana chain, and now it is positioning as a faster, cheaper L1 alternative.
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