I have a fondness and perhaps a slight bias towards Solana. I've built on the platform and created developer tutorials. During the last market cycle, it was one of my best investments of all time. During the golden era, VC funding was widely available for anyone that wanted to build on Solana. There were grants, hackathons and a small conglomerate of VC’s focused on the ecosystem. These VC’s were led of course by Alameda Research. Alameda had some how managed to accumulate somewhere in the region of 20% of Solana’s total supply. There was some falling out and obfuscation about how this had come about. On the 14th September 2021 Solana received a dDoS attack which took out the entire network for 17 hours. There were a series of network failures after this which created a severe blow to Solana’s credibility. The network would occasionally go down for hours which raised questions about its reliability and the centralization around node operators. As a result, many developers who were excited to build on Solana either decided to look elsewhere for funding or were swayed by the Solana ecosystem grants and the venture capital ecosystem around Alameda. On the 11th November 2022, Alameda and FTX filed for bankruptcy. The already hard hit crypto markets went into free fall. VC funding dried up completely and developers were no longer incentivized to build on Solana.
Liquidators this week received permission to start selling off the FTX holdings. They still own $1 billion dollars worth of Solana tokens and there is not one billion dollars worth of liquidity unless they can find an OTC buyer which seems unlikely. The “Saga” Solana Phone was a brilliant idea, they released their own mobile hardware device with an enclaved wallet. It may however have been a bit too early as it hasn’t gained traction.
Throughout its history, the Solana team has been somewhat liberal with the truth. When the network outages occurred, it was blamed on processing billions of transactions per second. Anyone familiar with the architecture could affirm the vast majority of these transactions were just rent payments for the data stored on accounts, essentially fake transactions. In truth Solana's value proposition is similar to what EOS had come up with four years earlier. While they do have a high speed blockchain, it comes at the cost of decentralization and security. If you run a small network of high spec servers you can go pretty fast. The network however was exaggerated to have thousands of nodes, only a handful of which had write permissions.
Solidity and the EVM has won the battle for smart contract developers. Solana is starting to come to terms with this and released SoLang. I looked at this in depth here: https://jamesbachini.com/solang-tutorial/ Unfortunately it’s a bit rough around the edges and not fully compatible with EVM contracts. The best solution would be for Solana to create an EVM container and run it as an execution layer directly on their nodes, perhaps as a layer two, with proofs backed up to the original L1. This would enable them to onboard every smart contract developer in the world. I spoke to Alex Kehaya at Solana about building SolEVM back in April 2021 and at the time he said it was something they were doing internally and didn’t need any help. It’s unfortunate this never materialized because it’s exactly what they needed then and still need right now. We’ve seen the demand for new EVM chains with Base in the last six months despite the market conditions. If a developer can fork Uniswap or some memecoin contract easily on your chain it gets them using it and lowers the barrier to entry. This then has the knock on effect of attracting traders and investment to the ecosystem. Once the money shows up it attracts more developers and the flywheel continues. In the current economic climate, when there's no incentive to build on Solana's native system, they face an uphill battle, both in terms of technology, architecture and public relations. Winning back the hearts and minds of developers and investors alike will be a daunting task. If Solana could build and launch a genuine EVM compatible environment (which SoLang is not) it would be their best chance of making a comeback. Combine this with a shift in PR to put out less BS and it starts to look like something investible again, especially if FTX selling creates a significant buying opportunity.
I wish Solana all the best for the future, but I fear it will become another ghost chain like EOS, reminding us of the pitfalls of sacrificing decentralization and security for speed and throughput. Research Posts
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