If you were looking at investing into cryptocurrency 18 months ago, one project that definitely would have sparked some interest was the Solana blockchain. Considered one of the more ground breaking technologies in crypto space at that time; you would not have been considered completely stupid for wanting to invest a cheeky couple of grand into the project. However, with the recent FTX collapse you would have been devastated to see the price of Solana go down like a lead balloon with its links to FTX and Almeda.
Why should these affiliations effect the price of Solana?
Alameda Research was a proprietary trading firm that was active in the financial markets, including the cryptocurrency market. The firm was founded in 2014 by Sam Bankman-Fried, who is also the CEO of the cryptocurrency exchange FTX.
Alameda Research was known for its expertise in quantitative trading and use of sophisticated trading algorithms. The firm was active in a variety of asset classes, including futures, options, and cryptocurrencies. It was also involved in the development of various decentralized finance (DeFi) projects, including the decentralized exchange Serum and the stablecoin projects Solana and Frax.
These sophisticated trading algorithm's turned out to be completely fraudulent. The whole thing was a fraud. Almeda and FTX was a scam.
In addition to its trading activities, Alameda Research was also involved in research and development of new financial technologies. Solana was one of these projects backed and heavily invested into by Almeda Research. With the recent collapse of FTX and Almeda Research it has left a lot of funding for the development of the project dry up.
It’s difficult to predict if Solana’s price can recover from the recent FTX scandal.
The FTX scandal refers to a series of events that occurred in late 2022 involving the cryptocurrency exchange FTX and the Solana Foundation, a non-profit organization that supports the development of the Solana ecosystem. The scandal centered around allegations of insider trading and conflicts of interest within the Solana Foundation, which led to the resignation of several Foundation members and sparked controversy within the Solana community. It is know known that SBF was manipulating crypto markets with stolen customer funds. We do not know for sure if SBF was using these funds to bump up the price of Solana, but it could be likely.
So what is Solana?
Solana is a decentralized, open-source blockchain platform that aims to provide fast, secure, and scalable blockchain infrastructure for decentralized applications (dApps). It was developed by Solana Labs, a San Francisco-based technology company.
Solana is designed to handle a large volume of transactions per second (TPS) and to offer low transaction fees. It uses a proof-of-stake (PoS) consensus algorithm, which means that users can validate transactions and participate in the network by staking (or holding) Solana tokens (SOL). This allows Solana to achieve fast transaction speeds and low energy consumption compared to proof-of-work (PoW) algorithms, which require users to perform complex calculations in order to validate transactions and secure the network.
Solana also offers a number of other features, including support for smart contracts, decentralized finance (DeFi) applications, and interoperability with other blockchain platforms. It has a growing developer community and is being used by a variety of projects, including decentralized exchanges, gaming platforms, and prediction markets.
Is Solana a good investment
It’s important to note that cryptocurrency prices can be highly volatile, and investing in cryptocurrencies carries a high level of risk. It’s always a good idea to thoroughly research and assess the potential risks and rewards before making any investment decisions.
With that said, Solana has gained significant traction in the cryptocurrency market since its launch in 2020. It has a strong developer community and partnerships with various projects in the decentralized finance (DeFi) space, which have helped to drive its adoption. Solana’s fast transaction speeds and low fees have also made it a popular choice for decentralized applications (dApps). But since the collapse of FTX two of the larger projects on Solana have switched over to other chains. Most dramatically, the DeGods and Y00ts NFT (non-fungible token) projects were confirmed to be leaving Solana for Ethereum and Polygon, respectively. In November, stablecoin issuer Tether swapped $1 billion of USDT from Solana to Ethereum.
Where to from here?
It will be important to watch what happens over the coming 6 months for the Solana project. If it can recover and continue to make progress with its development than it could be considered a good investment. But this is a massive gamble with a considerable amount of risk involved. -Your investment could potentially go to zero.