{"id":449598,"date":"2022-05-19T19:30:00","date_gmt":"2022-05-19T16:30:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/lost-sol-persistent-challenges-continue-to-impact-solana-price\/"},"modified":"2022-05-19T19:30:00","modified_gmt":"2022-05-19T16:30:00","slug":"lost-sol-persistent-challenges-continue-to-impact-solana-price","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/lost-sol-persistent-challenges-continue-to-impact-solana-price\/","title":{"rendered":"# Lost SOL? Persistent challenges continue to impact Solana price"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2ddcedc3786\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2ddcedc3786\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/lost-sol-persistent-challenges-continue-to-impact-solana-price\/#%E2%80%9D_Lost_SOL_Persistent_challenges_continue_to_impact_Solana_price_%E2%80%9C\" >&#8221; Lost SOL? Persistent challenges continue to impact Solana price &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/lost-sol-persistent-challenges-continue-to-impact-solana-price\/#TVL_and_the_number_of_active_addresses_dropped\" >TVL and the number of active addresses dropped<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/lost-sol-persistent-challenges-continue-to-impact-solana-price\/#SOL_is_likely_to_experience_more_pain\" >SOL is likely to experience more pain<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_Lost_SOL_Persistent_challenges_continue_to_impact_Solana_price_%E2%80%9C\"><\/span>&#8221; Lost SOL? Persistent challenges continue to impact Solana price &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-2a0745c6>The past thirty days have been an extremely bearish time for cryptocurrencies. The sector&#8217;s aggregate market capitalization plunged 33% to $1.31 trillion and Solana&#8217;s (SOL) downfall has been even more brutal. Currently, SOL has seen a 50% correction and trades at $51.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-05\/656721e5-ad4d-4a3a-b51e-5f8655d1b48e.png\"><figcaption style=\"text-align: center;\"><em>Solana\/USD price at Coinbase (blue) vs. altcoin capitalization (orange). Source: TradingView<\/em><\/figcaption><\/figure>\n<p>The network aims to overcome the Ethereum blockchain&#8217;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.<\/p>\n<p>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.<\/p>\n<p>Pinning the underperformance exclusively to the 7-hour network outage on April 30 seems too simplistic, and it doesn&#8217;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. <\/p>\n<p>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.<\/p>\n<p>To mitigate the issue, developers introduced three steps: a change in the data transfer protocol, stake-weighted transaction processing and &#8220;fee-based execution priority.&#8221;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"TVL_and_the_number_of_active_addresses_dropped\"><\/span>TVL and the number of active addresses dropped<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Solana&#8217;s main decentralized <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lication metric started to display weakness earlier in November after the network&#8217;s total value locked (TVL), which measures the amount deposited in its smart contracts, repeatedly failed to sustain levels above 60 million SOL.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-05\/9d0bd52d-3563-40af-8935-1c4816c5e9c0.png\"><figcaption style=\"text-align: center;\"><em>Solana network Total Value Locked, SOL. Source: Defi Llama<\/em><\/figcaption><\/figure>\n<p>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.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-05\/9b12cbfa-50a7-4cb4-bcb2-26173f5e1da4.png\"><figcaption style=\"text-align: center;\"><em>Solana dApps 7-day on-chain data. Source: DappRadar<\/em><\/figcaption><\/figure>\n<p>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\u2019s futures markets.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-05\/5e2d9e28-69c8-4308-9b93-1ee2aa03b60b.png\"><figcaption style=\"text-align: center;\"><em>Solana futures aggregate open interest. Source: Coinglass<\/em><\/figcaption><\/figure>\n<p>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. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"SOL_is_likely_to_experience_more_pain\"><\/span>SOL is likely to experience more pain<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>It&#8217;s probably impossible to pinpoint the exact reason for Solana&#8217;s price drop, but centralization issues after multiple network outages, a decrease in the network&#8217;s Dapps use and fading interest from derivatives traders are three factors contributing to the decline.<\/p>\n<p>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&#8217;s no doubt that Solana Labs has been working to reduce its dependence on the networks&#8217; validators, but at the same time, investors want to avoid centralized projects.<\/p>\n<p>Should the sentiment start to improve, there should be an inflow of deposits, increasing Solana&#8217;s TVL and the number of active addresses. As long as these indicators continue to deteriorate, there&#8217;s no way to predict a price bottom for SOL.<\/p>\n<p><em>The views and opinions expressed here are solely those of the <\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/noshitcoins\"><em>author<\/em><\/a><em> 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.<\/em><\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/lost-sol-persistent-challenges-continue-to-impact-solana-price\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; Lost SOL? Persistent challenges continue to impact Solana price &#8220; The past thirty days have been an extremely bearish time for cryptocurrencies. The sector&#8217;s aggregate market capitalization plunged 33% to $1.31 trillion and Solana&#8217;s (SOL) downfall has been even more brutal. Currently, SOL has seen a 50% correction and trades at $51. Solana\/USD price&#8230;<\/p>\n","protected":false},"author":1,"featured_media":449599,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDUvMzNhZGU5N2EtNmFhNy00OWExLTk3OTctYzQ4NzQ3MDRmNzc2LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,74863,74860,78168,74868,75012,75846,74939,74876,92498,73785],"class_list":["post-449598","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-cryptocurrencies","tag-cryptocurrency-exchange","tag-dapps","tag-defi","tag-derivatives","tag-futures","tag-market-analysis","tag-proof-of-stake","tag-solana","tag-markets"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/449598","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=449598"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/449598\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/449599"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=449598"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=449598"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=449598"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}