Solana’s woes deepened further as reputational damage from Bankman-Fried’s downfall spread, given his active endorsement of the network.
Solana has suffered a drastic decline, with over $700 million exiting the network-based applications. The falling sentiment has cost Solana network a huge drop in the total value locked (TVL) from $1 billion on November 2 to $300 million. The network is a casualty of the revealed collusion in FTX treasury accounts and affiliate company – Alameda Research.
Solana Suffers Massive Blows from FTX Ties
Solana’s downtrend began when news of FTX – whose chief Sam Bankman-Fried being a primary promoter-liquidity crisis surfaced. Solana Foundation admitted losing $1 million in cash equivalents to the FTX fallout. A further $3.2 million was held in FTX stock, native FTT tokens of $3.5 million, and $134.5 million within the decentralized Serum utility token (SRM).
The contagious decline has affected DeFi projects on the network. Notably, Solend lending protocol TVL declined by 63% to under $25 million. The decline spread to the decentralized exchanges (DEXs) – Orca and Raydium by losing 40% liquidity from $150 million.
Also read:Acknowledging the unpredictable nature of the restless bear market, Walken co-founder Alexei Kulevets indicated that Solana could suffer far-reaching blows from reputational damage.
NFT Protocol Metaplex Layoffs
The worsening crypto market conditions experienced across the Web3 ecosystem hit the Solana network the hardest. Besides, the contagion induced by FTX collapse has affected Solana-based NFT protocol maker – Metaplex. Admitting the worsening conditions, Solana chief executive Stephen Hess declared the necessity of a conservative approach by announcing layoffs in the Metaplex Studios team.
The layoffs indicate the Solana ecosystem is nursing the largest impact from the deep ties with Bankman-Fried, who considered it a pet favorite network. Bankman—Fried ties run deeper beyond public support to actively participate in building a decentralized exchange based on Solana – Project Serum. In addition, FTX constructed a Solana-centric NFT where multiple collectibles are inaccessible.
The layoffs announced by Metaplex illustrate the ripple effects that the FTX collapse is causing to the bearish crypto market. It demonstrates that reputational damage from the FTX collapse will wreak extensive havoc on networks without direct exposure to the bankrupted exchange.
Editorial credit: rafapress / shutterstock.com
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