Solana’s market value plunges by $ 20 billion after an outage. Is this good for Ethereum?

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Despite being one of the fastest appreciating cryptocurrencies of the year, Solana’s sol token gave up much of its massive gains this week, plunging more than 35%. from last week’s record following a network outage that some experts say could strengthen the case for more-established platforms like Ethereum.

Ethereum prices have risen by around 4% since the Solana outage, but their return of around 370% this … [+] pale year compared to land gain of nearly 7800%.

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Sol hit as much as 10% on Friday at $ 135.25, marking the token’s lowest level in nearly two weeks and pushing its market value to around $ 40.6 billion, or over $ 20 billion in below its September 9 high.

Although the token initially rose in a crypto crash last week, prices began to fall over the weekend as the market as a whole struggled to cut losses, with the sell-off rapidly intensifying on Tuesday morning. after an increase in the volume of transactions and bot activity triggered outages on Solana’s network for more than 17 hours.

In a statement, Solana said the flood of transactions resulted in excessive memory consumption that network engineers were unable to remedy. A group of main developers therefore decided to upgrade and restart the network, which made it possible to restore the functionality of the blockchain early Wednesday morning.

In a Friday note, Oanda analyst Edward Moya said the Solana outage and its fix showed it to be “far from unstoppable” and not as decentralized or self-sufficient as some investors might have believed.

He notes that the recent ground price issues could help Ethereum consolidate its leadership in the short term and could ultimately be “good news” for other blockchains that support smart contracts, self-executing deals that undercut. tend the technology behind buzzing non-fungible tokens and decentralized finance.

Ethereum’s prices have risen about 4% since the outage, but their return of around 370% this year is paltry compared to Solana’s nearly 7800% gain.

Versus

Several cryptocurrency experts have come to Solana’s defense after its outage, with some even reporting similar issues during Ethereum’s initial deployment. “We are still in the early days of building fast and scalable blockchains,” Emin Gn Sirer, professor of computer science at Cornell University, tweeted Wednesday, adding, “Problems can arise.” Meanwhile, Kyle Samani, managing partner of cryptocurrency investment firm Multicoin Capital, said on Friday that developer activity and the flow of money on Solana’s blockchain continued to grow at an “incredible rate. “, making the fledgling platform one of Ethereum’s strongest competitors despite its recent volatility. “I do not think so [Ethereum] may be moved, but it’s very clear that Solana is going to coexist with it, ”Samani told crypto investor Anthony Pompliano.

What to watch out for

Solana says she will continue to roll out fixes to help prevent future instability and has promised to give a “detailed postmortem” on the outage in “the coming weeks.”

Key context

The mind-blowing Solanas rally this year marked growth among a multitude of so-called altcoins, or cryptocurrency alternatives to market leaders bitcoin and ether. Along with cryptocurrencies like Cardano’s binance coin and ada, Solana’s support for smart contracts has helped her capitalize on the booming market around NFTs, which has seen record sales of 900 million. of dollars last month. While some praise the growth of other cryptocurrencies as a natural step for adoption, others are not so sure that booming altcoins generate lasting gains. In a note earlier this month, analysts at JPMorgan warned that bitcoin’s declining share in the cryptocurrency market likely reflects “the moss and retail investor mania,” and noted that a such mania had resulted in corrections of nearly 50%, they added.

Further reading

Solana suffers from high volatility after network was inundated with transactions (Forbes)

Solana leads massive Altcoin and Bitcoin rally as JPMorgan warns crypto markets are bubbly again (Forbes)

Solana overtakes Dogecoin as Ethereum price hits $ 4,000 for first time since $ 1,000 billion crash (Forbes)

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