Solana, a high performance blockchain, has managed to maintain price stability despite the FTX/Alameda staking wallet transferring $23.75M worth of SOL. The transfer raises concerns about potential market impact, as it is similar to what happened in November 2023 when $67M of SOL was sold by the same address.
Solana is designed for scalability, speed and efficiency. Launching in 2020, it's unique combination of Proof of History (PoH) and Proof of Stake (PoS) provides the necessary infrastructure. This allows Solana to process thousands of transactions per second (TPS), outperforming most other blockchains in terms of speed, while keeping transaction fees low. Alameda Research and FTX had invested heavily in the Solana ecosystem, acquiring millions worth of SOL tokens, which accounted for 11% of the total supply in 2022.
Subscribe to our newsletter
The best articles of the week, directly delivered into your mailbox.
Solana after the 2022 FTX crash and impact of unstaking
The FTX crash in 2022 revealed Solana's over-exposure to FTX-related liquidity and infrastructure. For example, Serum was a major DEX that was an important source of liquidity within Solana's ecosystem that was compromised in the FTX hack. Jupiter or Raydium, among others, stopped using Serum as a liquidity provider. FTX also invested heavily in other protocols built on top of the Solana blockchain, an estimated 20% of Solana projects had received investments from FTX or Alameda Research. This was particularly hard on the startup ecosystem, which saw its runway evaporate within a day of the collapse.
Back in 2022, Solana was poised to become a serious Ethereum contender after mastering outages or the massive $320 million Wormhole bridge exploit. However, the FTX collapse caused Solana's total value locked (TVL) to plummet nearly 70% and the token price to drop to a third of its previous highs. In the aftermath, Solana pledged to maintain sufficient reserves to sustain the company's burn rate. It took nearly two years for Solana to regain it's footing, but it has now surpassed Ethereum in many key metrics such as daily active addresses, transactions, and occasionally even DEX volume.
In a series of multiple transactions from about a week ago, the FTX/Alameda staking wallet transferred about $23.75M worth of SOL. However, the same address still holds over $1 billion in SOL. As seen with the recent sell-off of released bitcoin from the Mt. Gox case and the German government, which coincided with shaky market conditions, had a severe price impact on the currency. Solana has a nearly 18x smaller market cap than bitcoin, sell offs in the millions if not billions would have a drastic price impact and could cause serious FUD. However, with recent updates, the sentiment is very positive.
FTX unstaking and the Solana Seeker
Interestingly, FTX will continue to receive SOL as part of it's linear monthly vesting schedule through January 2028. This will likely be sold by the trustee to generate funds for outstanding creditors. The timing of the latest release comes just before the sentencing of Caroline Ellison on September 24th. The former CEO of Alameda Research pleaded guilty two years ago for her role in the company's fraudulent activities and is seeking no jail time.
1/ We’ve been deep in build mode for months, and we’re excited to show you what we've been working on.
Introducing the next chapter of Solana Mobile: the Solana Seeker 🧵👇 pic.twitter.com/2UW3Wqhymw
— Seeker | Solana Mobile (@solanamobile) September 19, 2024
Solana's ecosystem continues to evolve, with recent innovations including Solana Blinks, which aims to integrate blockchain transactions into social media, and "Firedancer," a new validator client designed to increase transaction speed. Solana just announced the release of the second generation of its crypto phone, dubbed "Seeker," in 2025. Given that Solana's founders come from the telecom industry, it is not surprising that Solana is focusing on mobile development.
After the first generation "Saga" received mostly negative feedback, a bonk airdrop tied to the phone saved its reputation. The Seeker phone sold over 140,000 units in pre-sales, securing a development budget of over $63 million. Seeker will have a better battery, a stronger camera and a lighter design. The device will also feature crypto-specific enhancements, such as a built-in crypto wallet tied to a secure Seed Vault key storage for more seamless crypto transactions. The device builds on the Solana dapp store, providing a platform for developers to launch crypto applications.
