Solana in the cellar – Solana is a layer 1 blockchain that offers a fast and near-free environment. Faced with uncertainties in the markets, the SOL token sees its price plummet and the whales face liquidations.
Solana: her SOL token plummets
It’s been several days since crypto markets are in the heart of the turmoil. Indeed, unfavorable market conditions have impacted even the largest players in the ecosystem.
Thus, the giant FTX shows many signs of weaknesses. Indeed, according to the information disclosed, the platform is facing significant liquidity problems. So that Binance, its longtime competitor, could buy the platform.
Obviously, in the face of these uncertainties, the entire cryptocurrency market plunged. On average, cryptocurrencies have recorded a drop of around 10% over the last 7 days.
However, some are more affected than others. This is particularly the case of Solana’s own token. Indeed, the SOL course has recorded a much larger drop with -35% in the last 24 hours.
This fall can partly be explained by the link that exists between Solana and FTX, in particular via Alameda Research.
In addition, this fall could continue with the release of SOL tokens, so far blocked from early investors. Among the investors who should obtain new SOLs, we find in particular Alameda Researchwho could well use these funds to get their heads above water.
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Falling from the SOL: sweaty whales
As is often the case following major falls in prices, many positions are in the throes of liquidations.
Indeed, many DeFi protocols offer to make decentralized loans in exchange for the deposit of collateral. The collateral ensures the value of the loan and can be used by the protocol to repay the loan if the value of the collateral drops too much.
This is exactly the situation that many users encounter on Solana. As an example, we can consider the case of the address 3oSE9.
In practice, 3oSE9 filed 2.4 million SOL tokens on the Solend protocol, for an estimated value of 50 million dollars.
This amount allowed him to borrow 44 million USDC. However, faced with the fall in the price of SOL, its collateralization ratio continued to decrease until it reached a dangerous limit, as revealed by Wu Blockchain on Twitter.
Since publication, the account has been partially liquidated by Solend’s liquidators. Therefore, 14 million USDC was repaid by liquidating 750,000 SOL. A liquidation that allowed the user to see his collateralization ratio go up slightly.
Nevertheless, the latter is not immune to a second liquidation in the event of a drop in the SOL token.
Moreover, the Solend protocol could well face a liquidation spiral. Indeed, if too large a loan is liquidated, its collateral is sold on public market places. However, selling many tokens can negatively impact the price of SOL and lead to further liquidations. These liquidations will in turn impact the price and lead to further liquidations.
On his side, FTX founder Sam Bankman-Fried also saw his fortune melt like snow in the sun. Indeed, he recorded a loss of nearly 94% of his fortune in the space of 24 hours.
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