stub Solana Price Eyes Stability Above $90, Users Worried About the Network's Future Following Weekend Outage -
Connect with us

Solana News

Solana Price Eyes Stability Above $90, Users Worried About the Network’s Future Following Weekend Outage

Updated on is committed to rigorous editorial standards. We may receive compensation when you click on links to products we review. Please view our affiliate disclosure. Trading involves risk which may result in the loss of capital.

Solana sits eighth in market capital after losing the seventh position to Ripple's native token XRP. Market analysts have chalked this massive plunge up to the recent network outage that Solana suffered ahead of the weekend. This is the fourth time the network has experienced instability issues, with concerns growing among users.

Here are more details on the outage, its impact on Solana's market performance and the position of Solana users

DeFi users feel the worst of the latest Solana network outage

Solana, touted to be the real Ethereum-killer, suffered another outage that saw traders unable to complete transactions over the weekend. These failed transactions made it impossible for users to save their accounts from forced liquidation leading to massive losses.

Lasting 48 hours, a post-mortem report indicated the issue was first detected on January 21 around 0:00 UTC. The team explained that they could only pinpoint the cause of the issue more than 24 hours later, around January 22, 17:55 UTC.

The issue was finally resolved yesterday, around 16:20 UTC, following a few changes to the network functionality that came along with the release of version 1.8.14. The Solana team said that the patch was to remedy the worst effects of the detected issue.

Bot activity caused the outage

As the market crashed into the weekend, arbitrage opportunities arose. Liquidation and arbitration bot activity on the network shot up as well. Bots spammed the network with a massive volume of cheap and highly profitable transactions. The result was a heavy load for validators and the legitimate user transactions drowned out.

The network problems came at the worst time possible (market volatility) for DeFi users. Users who held collateralized loans from lending platform Solend suffered heavy and forced liquidation resulting in massive losses.

Solend acknowledged the losses and said it was reconciling the affected users.

“We're painfully aware of the issues in which users were unable to save themselves from being liquidated due to network congestion and are looking into reconciliation,” Solend tweeted yesterday.

Solana's increasingly worrying outages cast doubts on the network's credibility

Solana has been lauded as a better alternative to Ethereum because of its scalability and fast transaction speed merits. However, the proof of stake blockchain has found it difficult to live up to the status, having suffered several network issues in the last two months.

Looking back, between January 6 and January 12, Solana users saw degraded performance across the network resulting from cache exhaustion. Mid last month, the network experienced another outage caused by the launch of an NFT collection. In addition, a few months before, in September, the network was down for about 17 hours with a transaction overload issue.

For a network touted to handle mainstream adoption into the future, Solana is not performing well with this many outages. It may be difficult for it to establish itself as a reliable transactional network considering that it acknowledged similar problems might happen again.

Solana users are willing to jump out of the ship

Solana's latest outage has left many users frustrated, more so, traders who couldn't make plays when the network was offline. Though the problem was fixed after a while, Solana's reliability has been brought into question. Many have expressed their disappointment in the network, while others lodged their complaints on social media.

Jim Greco, the managing director of cryptocurrency quantitative-trading firm Radkl, criticized the network for failing when needed most. In a tweet, he deprecated that it (Solana) couldn't be trusted with ‘real capital.'

Renowned author cum entrepreneur Mark Jeffrey also showed disapproval in Solana in a tweet. Jeffrey brought to the fore that Solana had experienced five similar incidents before the latest one. He compared Solana to EOS (flopped after completing a $4 billion raise) and noted that Solana has fallen out of favor as a smart contract platform.

Solana DeFi outlook

Solana is losing market share in the decentralized finance sector, according to data from DeFi Llama. Alternatives like Fantom and Avalanche have scooped up the hemorrhaging share. In particular, the former has seen significant growth and is the only chain with green arrows in daily, weekly and monthly total value locked changes.

DeFi chain ranking. Source: DeFi Llama

Meanwhile, Solana has fallen to sixth place with an equivalent figure of $7.25 billion behind Avalanche, boasting an $8.09 billion TVL figure. DeFi Llama also shows that Solana has shed over 40% in the past month and bout 10% in the last 24 hours.

Solana (SOL) market performance

Market data shows that SOL is one of the biggest losers among the top cryptocurrencies. The SOL/USD pair is swinging at $85 – down by 12.47% (the largest dip among the top ten crypto tokens by market cap) in the last 24 hours as per coinmarketcap.

SOL/USD 7-day trading chart

The crypto ranking website also shows that the token has slid over 39% of its value since last Monday. Solana's biggest challenge at present is constant network outages. Questions are arising on whether Solana can deliver on its potential to serve mainstream uptake.

The network shared in a tweet over the weekend that its team was working to ensure the stability issues don't recur. It is crucial for Solana to stay afloat, especially now that the market is experiencing a huge sell-off wave.

Though patience isn't thin among Solana users, more outages could make users lose trust in the network. This outcome could result in scenario where a huge fraction of them abandon the blockchain and exit their market positions even at a high cost.

To learn more about this token visit our Investing in Solana guide.

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.