The past eighty days have been moderately bearish for cryptocurrencies as the altcoin market capitalization declined by 16%. The downside movement can be partially explained by the U.S. Federal Reserve’s quantitative tightening, rising interest rates and halting of asset purchases. Although they are aimed at curbing inflationary pressure, the policy also increases the borrowing costs for consumers and businesses.
Solana’s (SOL) downfall has been even more brutal, with the altcoin facing a 29% correction since August. The smart contract network focuses on low fees and speed, but the frequent outages highlight a centralization issue.
The latest setback occurred on Sept. 30 after a misconfigured validator halted the blockchain transactions. A duplicate node instance caused the network to fork, as the remaining nodes could not agree on the correct chain version.
Recently, Solana’s co-founder Anatoly Yakovenko placed his bets on Firedancer, a scaling solution developed by Jump Crypto in partnership with the Solana Foundation. Dubbed the long-term fix to the network outage problem, the mechanism should be ready for testing in the coming months.
On Oct. 11, Solana-based decentralized finance exchange Mango Markets was hit with an exploit of over $115 million. The attacker successfully manipulated the value of MNGO native token collateral, taking out “massive loans” from Mango’s treasury.
Solana’s TVL and the number of active addresses dropped
Solana’s primary decentralized application metric started to display weakness earlier in November. The network’s total value locked (TVL), which measures the amount deposited in its smart contracts, broke to its lowest level since Sept. 2021 at 30.4 million SOL.
There are other factors which influence Solana’s decrease in value and TVL. To confirm whether DApp use has effectively decreased, investors should also analyze the number of active addresses within the ecosystem.
Oct. 19 data from DappRadar shows that the number of Solana network addresses interacting with decentralized applications declined in 13 of the top 20 DApps. The reduced interest was also reflected in SOL’s futures markets.
Related: Moola Market attacker returns most of $9M looted for $500K bounty
Fixed-month contracts usually trade at a slight premium to spot markets…
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