Lost SOL?  Persistent challenges continue to affect Solana prices

Lost SOL? Persistent challenges continue to affect Solana prices – Mail Bonus

The last thirty days have been a very bear time for cryptocurrencies. The combined market value of the industry fell by 33% to 1.31 trillion dollars and the collapse of Solana (SOL) has been even more brutal. Currently, SOL has seen a 50% correction and is trading at $ 51.

Solana / USD price on Coinbase (blue) against altcoin uppercase (orange). Source: TradingView

The Internet aims to overcome the Ethereum blockchain’s flexibility problem by incorporating a proof history (PoH) system into a proof block (PoS) blockchain. With PoH, Solana assigns a central node to determine business hours that the entire network can agree on.

The low fees offered by the Solana network have deceived developers and users, but frequent network outages continue to raise doubts about the centralization issue and have probably deterred some investors.

Fixing the powerlessness only with a 7-hour power outage on April 30 seems too simple and it does not explain why the disconnection started a month earlier. According to Solana Labs, the problem was caused by a robot that started a large business on Metaplex, a marketplace that is an unchangeable symbol (NFT) based on Solana.

The trade volume exceeded six million per second when it was at its peak and flooded over individual nodes, and as a result, the data memory of confirmers ran out, which led to a loss of solidarity and disruption to the network.

To alleviate the problem, developers introduced three steps: a change in data transfer protocols, batch business processing, and a “commission-related implementation priority.”

TVL and the number of active addresses decreased

Solana’s main decentralized application scale began to show weakness earlier in November after the network’s total blockchain (TVL), which measures the amount invested in its smart contracts, repeatedly managed to maintain levels above 60 million SOLs.

Solana net Total Value Locked, SOL. Source: Defi Llama

However, the 50% price correction has other factors than just reducing TVL. To confirm whether the use of DApp has actually decreased, investors should also analyze the number of active addresses within the ecosystem.

Solana dApps 7 days of data on a chain. Source: DappRadar

On May 18, data from DappRadar showed that the number of Solana email addresses interacting with the top 7 distributed applications decreased, with the exception of the DEX stock exchange Orca. Less interest in Solana DApps was also reflected in SOL’s future markets.

Solana futures collect open interest rates. Source: Coinglass

The chart above shows how Solana’s opening rates in the future fell by 22% last month to the current $ 510 million. This is of particular concern because fewer future agreements could reduce the effectiveness of arbitration boards and market makers.

SOL is likely to experience more pain

It is probably impossible to pinpoint the exact reason for Solana’s drop in prices, but central control problems following a variety of network outages, declining network usage DApps and declining interest from derivatives vendors are three factors contributing to the decline.

The data reviewed in this article suggest that Solana owners should not expect a price increase in the near future because online health surveys are still under pressure. There is no doubt that Solana Labs has worked to reduce its dependence on the network’s certifiers, but at the same time investors want to avoid centralized projects.

If attitudes begin to improve, there should be an influx of deposits, an increase in TVL Solana and the number of active addresses. As long as these indicators continue to deteriorate, there is no way to predict a price base for SOL.

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