GM Readers!📪 It's BitDegree Insider. Let's get on with the last week of 2022.
⭐️Today's selection:
- 🌤️Cloudy Solana Situation
- 😎Cool Fact Tuesday
- 👌Selected Meme of The Day
- 📰Bite-Sized News
SOLANA SITUATION
This year's been a roller coaster ride for the entire crypto sphere. Solana was no exception. You could even say that it was a roller coaster, especially for Solana.
When the FTX fell... it fell like a cut-down tree, and it landed straight up on Solana's shelter.
Let's see what are the latest signs (or omens) are revealing about how is Solana doing nowadays.
So, two major NFT collections, DeGods and y00ts, have announced plans to leave Solana.
DeGods and y00ts have promised to complete the "move" early next year. The cooperated actions might stem from the fact that both collections were made by the same creators.
Yet their path leads to different destinations. DeGods are heading towards Ethereum network, while y00ts have chosen Polygon sidechain.
It is very likely that this decision is dictated by the poor state of Solana after the bankruptcy of FTX.
Prior to it, in early fall, Solana was the only ecosystem whose NFT collections were showing steady growth.
Now critics say that such moves by popular NFT collections may administer the final blow to the entire network.
It has been confirmed that DeGods team had made an offer for Solana Foundation. They suggested staying on Solana if they were paid $5M.
It appears that this offer was refused. Meanwhile, Polygon's CEO has already changed their Twitter profile pic to a y00ts NFT.
But this story reveals only the tip of the iceberg.
Let's zoom out, and see how rough 2022 has been for Solana.
Let's start with a scary number. At the beginning of 2022, literally on January 1st, TVL (total value locked) on Solana was at its ATH (all-time high) - $6.68 billion. Today it's $210 million.
Ouch. That's a 97% drop.
Here are some more numbers about Solana's health:
- Daily active users: 108k (-37.7% down in a year.)
- Active developers: 70 (-17.6% down in a year).
So what has led Solana to such painful losses?
FTX collapse affected Solana greatly. Solana and its native SOL token got even dubbed as 'Sam's coins' because of its tight connection to FTX, and Alameda Research.
FTX held $982 million in SOL. And when it all got wiped out... People ran to save their investments by selling their own portion. This caused SOL's price to tank.
What's more, over $643 million worth of SOL were removed from the circulation because... Alameda Research owned them.
Now all of these assets are controlled by liquidators due to the Alameda's bankruptcy. This was yet another super painful blow for Solana.
At the time of writing, the token's worth around $11, while it was $170 on January 1st, 2022.
And... While Solana was already having too much on their plate... New competition arrived.
Such blockchains as Aptos landed in the crypto land. And that's not all. SUI is about to make an entrance as well. (Read about SUI here, in case you're not familiar with it).
But, as the saying goes - misery likes company. When competitors noticed that Solana's legs are shaking, they were quick to make a move.
OKX, the crypto exchange, launched a $100 million commitment to support projects that are currently experiencing liquidity problems. To projects that were built... On Solana.
This meant that Solana's ecosystem received yet another blow. Why suffer on Solana, when you can suffer somewhere else (and receive money for doing so)?
Or yet another event when Phantom, the most popular crypto wallet among Solana users... Announced that they're adding support for Ethereum and Polygon.
It signalled that Solana is losing its VIB (very important blockchain) status, since crypto service providers realized that ignoring other chains is probably not worth it anymore.
Step by step, these events gnawed away people's trust and confidence in the world's fastest blockchain. Now they're the fastest on the highway to hell. But...
Turn off that Chopin's funeral march. Yes, the signs are brutal, and things are not looking nice for Solana. But we shouldn't bury something that's still alive.
Yes, 2023 will be hardcore for Solana.
But hard times create strong men. Maybe the saying will apply here as well, and we'll be able to say that hard times create strong blockchains?
TL;DR: 2022 was super difficult for Solana. Many metrics signal its ultimate demise. But sometimes when you're down, the only way is up. Maybe Solana will prove this.
COOL FACT TUESDAY
NFTs. We've read (and wrote) a lot about NFT collections skyrocketing, shaking the market, creating new trends, setting new records, etc.
But... it appears that a huge chunk of the NFT hype was... actually a clever way of manipulating the market.
Apparently, 60% of this year's NFT transactions on Ethereum were... not legit. They appeared in the form of wash trading.
This amounts to $30 billion worth of transactions. $30 billion worth of... playing pretend. Here's what this means.
People were 'selling' NFTs they own to... Themselves. Buying an NFT, creating a new wallet, and... Buying this NFT from a newly-created wallet.
It boosts the trading volume of the NFT that you own, thus creating the impression that it has a high demand in the market.
This makes it easier to sell it to someone else for a higher price. So that's wash trading.
Such NFT marketplaces like LooksRare and X2Y2 were the most affected with 98% and 87% of their total sales being done in the form of washing.
This was the reason why many people were celebrating Solana's great performance in the NFT domain since Solana's NFT trading volume was around $50M this month. Because the numbers made it clear. The NFT situation on Ethereum is far from ideal. This means Solana is killing it, unlike Ethereum! Or… doest it? Not really…You see, it's even easier to wash trade on Solana... due to low gas fees and no research being conducted up-to-date. So… It's too early to celebrate Solana's performance.
TL;DR: 60% of this year's NFT transactions on Ethereum were actually attempts at wash trading. It's a way of manipulating the market to make your NFT look more sought-after.
SELECTED MEME OF THE DAY
BITE-SIZED NEWS
- US Treasury Department Delays Crypto Tax Reporting Rules. No clarity on the horizon.
- Philippine Regulators Warn Public about Using Unlicensed Crypto Exchanges. Philippine Regulators saying DYOR to everyone.
- Japan to Allow Domestic Distribution of Foreign Stablecoins in 2023. Sun rises for foreign stablecoins in the land of the rising sun.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.