Thread by @tokenmetricsinc

Solana $SOL trades below $10 for the first time in almost two years.

What went wrong, and why does it keep falling with FTX and Alameda out of the picture? 🧵 1/

The consequences of growing skepticism about Solana have been severe, with SOL falling from a peak of $259.96 to just over $9, a drop of 96%. 2/

While the platform saw significant growth and hype during the 2020-2021 bull market, particularly from venture capitalists, the departure of major projects to other chains and a dramatic drop in total value locked on the Solana chain have raised concerns. 3/

Technological challenges and competition from Ethereum layer 2s are frequently cited as concerns, but the most significant factor is the recent fall of Sam Bankman-Fried and his companies, FTX and Alameda Research. 4/

Bankman-Fried was a major supporter of Solana, and some believe that the appreciation of $SOL and related assets in 2020-2021 was driven in part by his market interventions and advocacy. 5/

Critics believe that market manipulation by Alameda was funded by redirecting customer funds from other assets, such as #Bitcoin and #Ether, toward the trading of $SOL and other ecosystem tokens like Serum and Oxygen. 6/

While the collapse of FTX and Alameda Research was a major factor in the drop of the SOL price, there are other reasons why Solana has continued to decline in value including... 7/

Network issues: Network outages and decreasing trust in the chain may have contributed to Solana's recent decline in value. 8/

Fake TVL: Ian Macalinao of Saber, a stablecoin exchange built on top of Solana, admitted that he "devised a scheme to maximize Solana's TVL" by stacking protocols on top of each other, causing a dollar to be counted several times. 9/

This inflated the value of Saber and Sunny, which made up $7.5 billion of Solana's $10.5 billion TVL at their peak. 10/

Competition: Solana competes with other cryptocurrencies for user adoption.

If there are new developments or innovations in the market that make other platforms more attractive, this could potentially lead to a decline in the price of Solana. 11/

The recent exit of #NFT projects @DeGodsNFT and @y00tsNFT from Solana to @Ethereum and @0xPolygon, respectively, has further hurt the chain's standing.

Stablecoin issuer Tether also swapped $1 billion of $USDT from Solana to Ethereum. 12/

Market conditions: Like any asset, the price of Solana can be affected by changes in supply and demand, investor sentiment, and overall economic trends. 13/

Despite facing a number of challenges that have led to a significant decline in its value, Solana has a strong community of supporters and ongoing development.

The blockchain has carved out a niche in the market as a faster and more cost-effective alternative to Ethereum. 14/

Whether Solana will be able to recover and achieve the success it previously enjoyed depends on how it addresses its current issues and adapts to the changing #cryptocurrency market. 15/

If you want to know where Solana could go next, head over to Token Metrics' Solana page powered by AI and Machine Learning: app.tokenmetrics.com/solana 16/

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