The collapse of FTX in 2022 was a harsh blow to the Solana blockchain, and it seems like it has not fully recovered from the damaging effects. Looking at the data, Solana has not returned to its best since the FTX collapse. As one of the victims of the FTX demise, Solana saw its on-chain and DeFi activity reduce at an enormous scale. This is very bad for a blockchain once dubbed "the Ethereum killer." It seems like Solana is the one who has died out of the competition. Apparently, the primary threat to the existence of this blockchain is the Solana FTX relations. Sam Bankman-Fried was a strong supporter of the blockchain before the collapse of his crypto exchange.
Since then, the activities in the Solana network have been close to death. According to data from the Solscan analytics platform, Solana’s active wallets have reduced by a whopping 60%. What makes this data worse is the period that it happened. Within the last 3 months, non-active wallets on the blockchain have increased by 60%. This is very bad compared to how busy the Solana network was before the FTX collapse. However, a close look at the data shows that the Solana blockchain has witnessed a downtrend in active wallets since May 2022. This was long before the FTX collapsed. But the collapse of FTX only made the situation worse than it was.
Solana DeFi Activity Declines
Solana DeFi has been in shambles since the collapse of FTX. The minting of SPL tokens has reduced by over 80% within the past 3 months.
Also, the NFT transactions happening in the Solana blockchain have dropped to a very high level. At the start of the year, it had a 30,000 daily trading volume. However, that number has fallen slightly over 10,000 within the past month.
Solana DeFi has been hard hit by the FTX collapse. Before the scandal involving FTX, the total value locked in Solana DeFi was more than $1 billion. But the total value locked in Solana DeFi at the moment is just a little over $500 million. Also, compared to its all-time high of $10 billion in November 2021, Solana DeFi has fallen by 91%. This is not only shocking; data also shows that Solana DeFi is recovering at a slower rate than the entire ecosystem. The entire DeFi ecosystem has been down by 70% since its all-time high, while Solana has been down by more than 90%.
Final Verdict
It is self-evident that the Solana FTX relations did very bad and extreme damage to the blockchain. The network has lost so much value compared to what it was beside the collapse of FTX. At the time of writing, Solana was trading at more than $24, and this is a shadow of the cryptocurrency price before FTX collapsed.
In its 24-hour trading chart, the cryptocurrency has increased by about 5%, thanks to the news of a possible FTX return. But compared to the FTX level, the price of Solana is still down by more than 32%. Even a comparison, if it's an all-time high, makes the situation look bad. At its all-time high, Solana was trading at $260. Compared to today's price, Solana is down by 91%.