Original author: Nian Qing, flowie, ChainCatcher

Compared with last year's peak moment, the second Breakpoint summit held by Solana in Lisbon from November 3rd to 7th this year is much more low-key.

But what was even more unexpected was that on November 8th, with the development of the FTX situation taking a turn for the worse, Solana, who had not recovered from the joy and exhaustion of the successful conclusion of the meeting, was quickly swept in by the FTX hurricane, and had to deal with it hastily and embarrassingly. With the FTX thunderstorm bringing a secondary crisis, we should put aside the relationship with FTX and pull people to the platform.

Solana has faced many challenges this year: encryption winter, continuous downtime, unprecedented large-scale attacks on ecological projects, and head-on competition between the new public chain Aptos and Sui, etc. In the face of these challenges, Solana has been looking for a way out: looking for downtime solutions, seeking EVM compatibility, expanding capacity through L2, launching Solana mobile phone Saga, etc. During Breakpoint, Solana plans to use GameFi as a new anchor.

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1. There is no VC in the "VC chain"

Data Sources:

Data Sources:CoinmarketCap

SBF has been inextricably linked with Solana for a long time. Its Alameda Research is one of Solana’s early investors, and has single-handedly contributed to the birth of Solana’s early ecological projects such as Serum and Oxygen. At the beginning of last year, when Solana’s institutional investor tokens were unlocked , SBF also purchased all SOL assets of investors through OTC at a price of $3, and has since invested in a large number of Solana ecological projects

Solana's PR on the FTX event was a bit awkward. On the 9th, Solana Labs joint creation toly tweeted: "Solana Labs does not have any assets on FTX." And specifically emphasized that Solana is an "American" company. Subsequently, Solana Labs, Solana leaders and founders began to "call" the community to tide over the difficulties by shouting slogans, and asked for help from their "friends and relatives" such as investors and ecological projects. Kanav Kariya, President of Jump Crypto, Kin Ecosystem, Teleportxyz, Magic Eden And other projects have started to stand for Solana, expressing their long-term optimism for Solana.

However, the crisis is still spreading. Projects on the Solana ecology began to experience liquidity crises one after another. The lending agreement Solend accumulated millions of dollars in bad debts after the price of SOL fell sharply. …In order to cope with the panic, Solana released a long list of data to prove to users the strength of its ecosystem and its future potential.

It was not until November 14 that the Solana Foundation officially announced the details related to the bankruptcy of FTX.data and facts: As of November 6, when FTX.com stopped processing withdrawals, its assets in the FTX.com account included approximately 3.24 million common shares of FTX Trading LTD, approximately 3.43 million FTT Tokens, and approximately 134.54 million SRM Tokens ( FTX’s DEX Serum token on Solana).

Even with the response, Solana still faces doubts from the community, and the price of SOL continues to fall. As the Solana ecosystem continued to suffer, some project parties began to be unable to withstand the pressure and wanted to migrate to other chains. The floor prices of Solana's two largest NFT projects, DeGods and y00ts, once fell by more than 60%. Frank, the pseudonym creator behind them, said on Twitter that he is considering transferring the NFT collection to Ethereum. But this behavior was quickly criticized by other builders and collectors in the Solana community, and the relevant tweets were eventually deleted.

Uncertainty and fear continue to spread throughout the ecosystem. It can be said that the development of Solana today is inseparable from the blessing and participation of SBF in the early days, but now this "backer" has collapsed. In addition, other investors in the Solana ecosystem were more or less affected by the FTX storm.

According to statistics from the data platform rootdata (beta version), the main supporters and investment institutions of the Solana ecological project are Solana Ventures, Alameda Research, Coinbase Ventures, Multicoin, and Jump Crypto.

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2. New public chain competition

If the FTX thunderstorm is a "black swan event" encountered by Solana, then the competitive pressure brought about by the development of new public chains such as Aptos and Sui is more like "boiling frogs in warm water" for Solana.

In the last cycle, the new public chain led by Solana rose rapidly with its aggressive low-fee and high-speed model, but it also gave new public chains such as Aptos the opportunity to overtake due to insufficient high performance and lack of reliability. The current situation is that the "Ethereum killer" can no longer kill Ethereum, which has a strong multi-chain ecosystem. Aptos, known as the "Solana killer", is eroding Solana in all aspects, including capital, projects, developers and users.

Due to downtime issues, from DeFi to GameFi, many teams and projects began to lose interest in Solana and turned to new public chains with better performance. In the past six months, many Solana ecological projects have announced to expand to the new public chain Aptos, such as Saber, Solend, SolanaFM, Solice, etc. Many of these projects have explained in related tweets that the pursuit of stability and security is the main reason, especially the fancy Its Move language.

For example, Metaverse project Solice plans to migrate to Aptos and launch on the Aptos chain instead of Solana.team said: “Over the past year, we have encountered several issues when building on the Solana mainnet Beta version including network congestion, downtime, wrong timestamps on the Metaplex auction platform, etc. The team spent too much time building the 2nd version around Solana. Layer solutions to integrate digital ledgers into game engines and get a smooth gaming experience. As a game company, you should spend more time and effort on game, backend and network development.”

As Solana co-founder Anatoly Yakovenko puts it, downtime has always been Solana's "curse."

Since September 2021, Solana has been down for 17 hours due to insufficient validator memory, and downtime has become a common occurrence in Solana. In December 2021 and January 2022, network congestion occurred due to DDoS attacks. Among them, the outage in January The downtime lasted 30 hours, and there were downtime events in April, May, and October thereafter.

In addition, the large-scale theft of Solana’s ecological wallets in August this year pushed Solana to the forefront. This incident affected nearly 10,000 Solana’s ecological wallets, which is almost one of the most affected security incidents in the encryption industry. What is even more criticized is that with the participation of many well-known developers and engineers in the industry, the reason for the theft has always been confusing. The Slope wallet, which is widely accused of being the culprit of the theft, but in such a large-scale security incident, Solana appears to be extremely Buddhist in terms of investigating the cause and post-event governance, and even staying out of it.

Although Solana has been emphasizing that the mechanism of the downtime problem is actually very clear, and the team is steadily advancing the solution to the problem. But at present, this curse is still a sword hanging over the head, and the repair of network problems will be a "long-term" process. After the latest network outage, Anatoly Yakovenko said that Firedancer, the second Solana client announced in August this year, will be a "long-term solution," developed by Jump Crypto in partnership with the Solana Foundation, with its own independent software development team. It is expected to significantly expand Solana, allowing it to process more transactions in a more efficient manner in the next one to two years.

Previously, Solana has proposed other solutions to solve network congestion and downtime problems, such as using the QUIC protocol to prevent robots from sending unlimited traffic, and using Stake Weighted QoS to allow traffic to exceed the range that the network can handle. Perform prioritization, adjust Fee Markets, etc.

In addition to the downtime problem of Solana, the Move language is also one of the most popular parts of the project party's migration to new public chains such as Aptos. One of the reasons for the algorithmic stablecoin USA to switch from Solana to Aptos is, "Aptos runs on Move VM. Move makes it easier to write secure and auditable contracts." In order to deal with external competition, in September this year, the Solana team The Move language has been included in the development strategy to increase developer interest and drive community development activity.

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Three, breakout

Under internal and external troubles, Solana has also gradually taken some actions to address the above-mentioned various problems.

I just mentioned Solana's measures to solve the downtime problem. In addition, Solana has another disadvantage compared to other ecology, that is, it is slightly closed.

In this regard, Solana first needs to seek EVM compatibility. Compared with other public chains, Solana is obviously lagging behind in this regard, but has accelerated the process in the near future. One of the solutions is Neon EVM, a smart contract layer based on Ethereum. Neon allows developers to directly migrate code without rewriting code in Rust. Neon Labs plans to launch the Neon EVM on December 12th. After its mainnet goes live, Ethereum projects such as Aave, Curve, and Sobal plan to deploy to Neon EVM.

Last year, Neon Labs attracted attention when it proposed a Solana EVM compatible solution, and received $40 million in private equity financing from venture capital such as Jump Capital and Solana Capital. But Solana is facing such a dilemma now, it may be difficult to undertake a large number of overflow projects from Ethereum.

Facing the multi-chain future, Solana has also begun to seek connections with other ecologies. Nitro is the first Solana VM chain, built on top of Cosmos. As an Optimistic Rollup with Sealevel Virtual Machine (SVM) compatibility, it enables developers to launch their Solana dApps on Cosmos and access IBC assets. Currently, Nitro has deployed the developer test network Nitro Devnet.

In addition, Solana is also undergoing vertical expansion. If Solana pushes the L1 expansion to the extreme, then the L2 expansion solution based on it has the potential to have better performance. Similar to Ethereum's multi-chain extension architecture, Layer N is built on top of Solana (which was once invested by FTX Ventures). According to official announcements, Layer N will break through the user's throughput and delay limits on Solana, and the calculation on the chain will be close to The first centralized server performance to accelerate the development of DeFi derivatives and on-chain social networks. Layer N expects to launch its mainnet next year and plans to deploy a public “sandbox” testing environment by the end of this year.

Of course, among these countermeasures, Solana's most daring attempt is the launch of the Web3 Android phone Saga. At the inaugural Breakpoint a year ago, Anatoly Yakovenko had the idea of ​​ushering in the era of mobile encryption. Eight months later, Solana Mobile released Saga and Solana Mobile Stack (SMS), the technology that broadly unlocks the Web3 ecosystem on mobile devices.

The Saga will include a Web3 dapp store, integrated Solana Pay to facilitate QR code-based on-chain payments, a mobile wallet adapter and a "seed vault" (to store private keys), with phones planned for $1,000 in early 2023 price launch. During the recent Breakpoint, Saga also announced partnerships with Helium and Ledger.

But far water can't put out close fire. I believe that at this moment, no one can understand the weight of the phrase "confidence is more important than gold" better than Solana, and Solana will continue to be affected until the end of the FTX event.

According to data from DefiLlama, the total lock-up volume of Solana has shrunk rapidly to 320 million US dollars in the past week, a drop of more than 90% from the previous highest point, lagging behind BNB Chain, Polygon, Avalanche and other networks, ranking twelfth among all networks . Even without the impact of the FTX incident, the decline in its lock-up volume was significantly greater than that of other first-tier public chains in this bear market. And the price of Sol has dropped to $14.

Objectively speaking, if there is no "black swan event", even in the face of the loss of assets and developers, the development activities on Solana will still be active. According to @sec3dev, on November 8th, developers used 1092 programs, Solana programs have been written, deployed, and audited by more than 25,000 independent developers.

Compared with other emerging networks, Solana's core advantage is its relatively prosperous community ecology, which is also the result of its first-mover advantage and long-term strong support from the SBF department. Previously, when many applications left and built their own blockchains, Helium's decision to migrate to Solana was based on Solana's huge ecosystem. The founder of Helium explained that Solana brings together a large number of developers, applications, and teams. In addition, HNT is natively compatible with other innovative projects in the Solana ecosystem, enabling HNT, MOBILE, and IOT Token holders to obtain more use cases. After the FTX incident, Helium said that it will still migrate to Solana, and the criteria for evaluating the L1 blockchain have not changed, and the market has been hit hard not in the decision-making considerations.

In general, the thunderstorms of industry leaders such as FTX are bound to have a negative impact on the development potential of the new public chain, and may even fundamentally impact the industry's confidence in the so-called high-performance public chain. Especially after the lack of capital support and the attractiveness of the currency price, the market's attention will also drop significantly. Against this background, Solana will face daunting challenges in regaining market confidence. Either it will collapse, or it will be reborn from the ashes. Solana's fate will be revealed in the next few years.