Recent studies show that the number of users of decentralized applications and the value of the capital raised in the Solana network have recently decreased significantly. However, there are still promising signs for investors in this digital currency.
According to the Kevin Telegraph, digital currencies failed to start well in 2022, and to date, their total market value has fallen 21 percent to $ 1.77 trillion. Meanwhile, Solana’s reform is so bad that the digital currency has lost 48.5% of its value since early 2022.
The total value of the locked-in capital in the Solana network is $ 35 million, and the value of its tokens is higher than other digital currencies. This amount of locked-in capital represents 74% of Solana’s circulating tokens. The poor performance of this digital currency may be due to several reasons, but one of the reasons is the four accidents that occurred in late 2021 and early 2022.
The last incident on the digital currency network was a DDoS attack on January 7. The attack prompted Solana Labs, the developer of the digital currency, to update the Solana code to prevent further attacks.
However, investors are more concerned about centralism, which is driven by the cost of becoming one of the network’s credentials. In order for Solana’s network validators to check full block transactions in 400 milliseconds, they need hardware that has a 12-core 2.8 GHz processor, 256 GB of memory, 1 terabyte of SSD memory and high-speed Internet. It should be noted that currently the blocking time or the time required to create each block in the Solana network is 400 milliseconds or 0.4 seconds.
An activist in the digital currency market, nicknamed UltraXBT.eth, criticized the centralized structure of the Solana network on Twitter.
Solana works well as a centralized, government-coordinated company, but I prefer to use digital currencies and a real blockchain.
After the total locked-up capital of the Solana network reached $ 15 billion in early November 2021, the network’s main active decentralized programs showed weaknesses.
In the chart above you can see that the value of deposits related to decentralized programs operating in the Solana network has decreased by 50% in three months and the chart has already reached its lowest level since September 8, 2021 (17 September). By comparison, the Phantom, whose total locked-in capital doubled in three months to $ 9.5 billion. The total value of the locked assets of the network of Terra, another of Solana’s rivals, rose 87 percent to $ 23.2 billion.
However, one of the good news from the Solana Network on February 21 is that Solana Ventures, the investment arm of Solana Labs, has partnered with FTX and Lightspeed Venture. ) To launch a new blockchain-based game. It is worth mentioning that these companies announced on November 5, 2021 (November 4) that they will allocate a $ 100 million fund for this sector.
To make sure that the depreciation of the total locked-in capital of the Solana network is worrying or not, we need to look at the indicators for the use of the network’s decentralized program. As some decentralized programs are not active in the field of finance, the value of the deposited tokens is not important to them.
As you can see in the image above, by January 28, the number of addresses in the Solana network that interacted with its decentralized applications had dropped by an average of 18 percent. Meanwhile, only the number of users of the Solend algorithmic crediting protocol has grown.
The decline in traders’ interest in Solana’s decentralized programs has also affected the volume of open-end contracts in the digital currency futures market. Simply put, open contracts are all trading opportunities created by market participants that are not yet closed. According to available data, the volume of open contracts of Solana reached 2 billion dollars on November 6, 2021 and recently underwent a sharp revision.
As mentioned, the Solana network has suffered more from the recent drop in prices than other smart contract platforms. However, it should be noted that this network is also widely used in the NFT market. According to Magic Eden, about 178,820 addresses belonging to the Solana network have been active in the NFT market in the last 30 days.
In addition, the entry of Solana Ventures into the Chinese blockchain gaming industry may indicate the high processing capacity of the Solana network. For example, according to the DappRadar platform, half of the top ten decentralized applications in each blockchain belong to the industry, namely Chinese blockchain games. Splinterlands and Alien Worlds have 578,280 and 544,900 active addresses, respectively.
The above data show that Solana’s network has weakened compared to its competitors. However, the holders of this digital currency do not seem too worried; Because 74% of the supply of this digital currency is still stored and locked in various protocols. As a result, while Solana Labs is demonstrating the potential of this network with its collaboration and investment, we need not worry too much about the decline in the price of this digital currency.
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