2022 hasn’t been a successful year for crypto, with the global market capitalization falling by 21% to $1.77 trillion. Solana’s (SOL) downturn has been considerably more severe, with a 48.5 percent year-to-date decline.
Solana is the staking leader, with $35 billion in assets locked in. Which is comparable to 74% of the SOL tokens in circulation. There are several causes for the poor performance, which include four network failures in late 2021 and early 2022.
The most recent instance, which occurred on January 7, ascribed to a distributed denial-of-service (DDoS) attack. Which prompted Solana Lab developers to upgrade the software and, as a result, denies these kinds of requests.
Investors, on the other hand, are worried about the centralization brought about by the expenses of becoming a Solana verifier. The suggested gear for 400-millisecond block timings incorporates a 12 core 2.8GHz CPU, 256 GB memory, high-speed 1 TB SSD storage, and low-latency internet access.
Solana’s DApp Usage Decline
Solana’s major decentralized application measure began to show signs of instability in early November. This was when the platform’s total value locked (TVL) began to hover around $15 billion.
Solana’s decentralized application (DApp) deposits have dropped by half in the previous three months, as the cryptocurrency has dropped to its lowest level since September 8. As per DappRadar statistics, the average volume of Solana network addresses engaging with decentralized applications decreased by 18% on January 28.
Solend, an algorithmic loan system, was the single most beneficial development. The drop in demand in Solana DApps was also mirrored in its futures open interest, which topped at $2 billion on Nov. 6 before falling precipitously.
In contrast, Fantom’s TVL is now $9.5 billion after doubling in the same three months. Terra (LUNA), a competitor to DApp scaling solutions, saw its TVL climb by 87 percent to $23.2 billion, putting it in second place.
On a positive note, FTX.US, the American branch of the global cryptocurrency derivative and spot marketplace FTX, unveiled the launch of its new blockchain gaming unit on February 21. It is also important to note that on November 5, Solana Ventures joined up with FTX and Lightspeed Venture. This was to form a $100 million fund focused on the sector.
Unexpected Impact on Gaming Industry
Although Solana had the most impact when compared to other smart contract networks, there is a strong network activity on NFT exchanges. This was seen by Magic Eden’s 178,820 active addresses in the previous 30 days.
Furthermore, Solana Ventures’ investment in the gaming industry could highlight the platform’s processing capabilities even more. For example, games account for half of the top ten DApps on each blockchain analyzed by DappRadar. This contains Splinterlands (578,280 active addresses) and Alien Worlds (544,900).
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