Solana and its troubles

On the 1st of October 2022, Solana had a major outage lasting a total of 6 hours and 19 minutes. During this time, the Solana network stopped processing transactions and went completely offline. This is not the first time Solana has been offline. According to Solana’s data, the network had major outages on:

• 1 June, 4 hr 10 min
• 1 May, 5 hr 31 min
• 30 Apr, 2 hr 42 min
• 21st to the 22nd of January for 29 hr and 22 min
• 6th to the 12th of January 58 hr and 58 min.

This is rather concerning for any blockchain. When compared to bitcoin, where there has not been a downtime event for 3507 day, or nearly 10 years, we see a significant difference. So first of all, what is the issue? And if it’s such a big deal, why is Solana still a top 10 coin by market cap?

Solana's ecosystem

The long term vision for most cryptocurrencies is full-spectrum adoption. This includes payment systems, less volatile price fluctuations and multiple billion unique wallets. So let’s put that into perspective, 10 years from now you are standing in the supermarket wanting to pay for your groceries. You want to pay using the Solana blockchain, but there is a 4 hour outage. This is not particularly user friendly and incredibly problematic for future adoption. If this is such a big problem, why does Solana still have one of the top 10 market caps in crypto?

Solana, the Ethereum killer, has a strong following. The NFT market is active with lower fees and minting prices opening up the market to projects and customers that are not willing to pay $100 in gas fees. Furthermore, the 65,000 transactions per second on the Solana network allow for almost instant transactions. But it’s not just the NFT market that is keeping Solana’s head above water, Solana has some of the most used and widely adopted dapps in the crypto space. According to DappRadar, Gameta had 1.9 million unique verified wallets using the Solana dapp. In comparison, 1.5 million unique wallets used PancakeSwap. This makes Gameta the most used dapp in the world.

Impact of Solana Outages

So Solana still has a lot of activity, which shows that the blockchain is still trusted by its users. It seems as though the Solana users value the development in the dapps and the NFT project more than the blockchain outages. However, it’s safe to say that the outages have knocked Solana slightly down the food chain. Below is a graph showing the market cap of Solana compared to bitcoin since the start of the year. 

Where we see Bitcoin recovering slightly in mid June, Solana is left behind and drops down the list of top market cap coins. In December 2021, Solana was ranked as the 5th highest market cap. So how does this compare to its top 10 market cap competitors?

The figure above shows the market dominance of the top 10 coins excluding bitcoin and ethereum. Other than Dogecoin and Cardano, it can be seen that all other top 10 coins are seeing an increase in market cap. Where investors have returned to Bitcoin, Ethereum, BNB, XRP and many others, it seems as though investors are not yet as keen to return to Solana. 

Future of Solana?

As for the future of Solana, it’s a good blockchain (when it's up). All cryptos have their issues they need to work through, for Solana it is reliability. Lets hope they can keep it up ;)

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