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Solana still investors’ favorite despite last week’s network outage

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  • Despite the recent denial-of-service attack, Solana marks another week of charming institutional investors with $4.8 million inflows in investment products.
  • Billionaire Sam Bankman-Fried said the outage was sad and frustrating but that it’s the natural effect of scaling.

Last week, the Solana (SOL) network suffered a denial-of-service (DoS) attack lasting over 17 hours. Unfazed, institutional investors still indulged in SOL, with inflows just shy of $5 million recorded over the same period.

The Solana Foundation attributed the issue to “resource exhaustion” following a flood of transactions reaching 400,000 TPS. The events leading up to the outage happened during the launch of an initial decentralized exchange (DEX) offering. The debut was hosted by the networks’ DeFi protocol Raydium.

With the networks’ distributed nodes overwhelmed by transactions, the network crashed due to high memory demand. Eventually, Solana’s block production halted with failure to reach a consensus over the blockchain’s status.

As a solution, Solana’s blockchain validators decided to update and restart the network. This created a hard fork from the last confirmed block. Coordinating the restart required 80 percent of validators and 14 hours for the network to start running again.

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The drawback was a rare issue, the Solana Foundation report reads. The Foundation will, however, complete an additional extensive technical postmortem in the upcoming weeks.

Solana and institutional investors

Despite the technical hitch, Solana investment products saw inflows of $4.8 million last week, CoinShares reports. It seems investors chose to disregard the fracas as a minor setback rather than an inherent issue of the network. Investors, however, bet bigger on Bitcoin and Ethereum with the digital assets witnessing inflows of $15M and $6.6M respectively.

Speaking of Solana’s outage in a Bloomberg Interview, crypto billionaire Sam Bankman-Fried said:

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It’s always sad when these happen, it’s always frustrating.

Nevertheless, the founder and CEO of the FTX crypto exchange, who is also a ‘huge fanboy of Solana’ added:

What this is focused on is as you try to massively scale up a blockchain, eventually you test its current limits.

Optimistic just like Solana’s investors, the crypto entrepreneur thinks the issue is just the natural result of fast-paced growth. Bankman-Fried now thinks the problem has been resolved.

SOL, one of the industry’s fast-rising tokens, has recorded fourteen-day lows as our data shows. Prices worsened following last week’s incident, standing at a 19 percent low for that week. At writing time, SOL was exchanging hands at $143.42, having gained 0.9 percent in the day. A four-hour chart suggests that SOL is consolidating following its all-time high of Sept. 9.

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With the resistance Solana’s price has had in light of the recent attack, further losses are not expected. This is likely so unless hit by massive selling pressure like the recently reported global markets correction. China’s Evergrande Real Estate Group dipped over 10 percent in the stock market with the effects reverberating all through.

Solana

Solana price positioned for new bull rally towards $275

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  • Solana price breaks out above bull flag, indicating uptrend continuation.
  • Moving and holding above $220 is essential to continue bullish momentum.
  • Failure to extend higher here could see new monthly lows.

Solana price has hugged the top of the Cloud (Senkou Span A) as its primary support level for the past week. The respect of Senkou Span A as support has resulted in Solana moving and closing above one of the two Ichimoku levels necessary to confirm a new uptrend.

Solana price must close above the $220 value area before testing $275

Solana price is up against its primary and final Ichimoku resistance level on the daily Ichimoku chart. The Kijun-Sen within the Ichimoku system represents medium-term support and resistance and is the primary level for intraday and intraweek trading strategies within the Ichimoku system. The Kijun-Sen at the $220 level is precisely where Solana finds itself pushing against.

A daily close of Solana price above $220 provides more protection from near-term downside movement than it does upside potential for a couple of reasons. First, a close above the Kijun-Sen would convert the Kijun-Sen from a resistance level to support. Second, because retests of breakouts from bull flags are extremely common, the combination of the Kijun-Sen and top of the bull flag create a double-support structure.

SOL/USDT Daily Ichimoku Chart

Solana price does have downside risks. The Composite Index has created a high above the previous high peak on November 21st, while the candlestick chart shows the current daily high is lower than the November 21st high. This creates a condition known as hidden bearish divergence – a warning that the current drive higher may fail.

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It is essential that Solana price close above the November 21st open of $217, or the hidden bearish divergence may push Solana back into the bull flag and likely even lower to test the bottom of the Cloud (Senkou Span B) at $184.

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Will Solana [SOL] give Ethereum [ETH] a run for the money?

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Solana is showing a promising situation in terms of attracting more projects, and it seems the battle with Ethereum continues strongly. There are many projects announcing every day about migration from Ethereum to the Solana network.

It seems the gas price and scalability features of the latter are attracting them significantly. Although Ethereum itself is in a good position because of various sectors like DeFi, NFT, and metaverse running on it, Solana has been successful in hosting more projects and may give Ethereum a run for the money.

One of the latest projects announcing a migration to Ethereum is Crowny. Crowny is a platform that connects users to their loved brands. It rewards users for engaging with their lived brands and is growing fast in terms of attracting users. According to the latest announcement on Twitter, the platform is set to migrate from Ethereum to Solana on December 8th. The real reason behind this migration is lower costs per transaction on Solana compared to Ethereum.

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Besides, the scalability features let Crowny and Raydium grow faster and attract more users. According to the announcement, the Crowny team believes in Solana’s various features:

“Solana blockchain offers extremely low costs per transaction and ensures limitless scalability for years to come. This cutting-edge architecture is all about speed. It’s the fastest blockchain around. As hardware improves, so does the network.”

Another good news for the Solana community comes from the famous decentralized web browser Brave. Brave browser announced some days ago that it partners with Solana to integrate that blockchain into the browser and make it the default for dApp support. It’s great news for Solana because Brave is currently one of the most famous browsers in the market. It can benefit developers on Solana who can provide their dApps to a bugger user-base in this scenario.

Brave has 42 million monthly active users and 1.3 million verified creators. The reason for choosing Solana is the same as Crowny. Lower transaction fees and supporting fast Web3 applications are great benefits of this blockchain. Brendan Eich, CEO, and co-founder of Brave said:

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“With more and more users and creators requiring tools for fast and affordable access to the decentralized Web, this integration will seamlessly pave the way for the next billion crypto users to harness applications and tokens.”

More users and projects on Solana means more opportunities for growth in this ecosystem. When the migrations from Ethereum to Solana grow, it shows great benefits in the competition that can even result in higher deployments and higher prices for the SOL token.

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This is causing users to choose Solana over Ethereum

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Ethereum’s gas fees and speeds are costing not just users, but the ecosystem itself as more and more players are migrating to rival blockchains.

The latest stakeholder to make the move is Crowny – an app rewarding shoppers for various interactions with brands. The date for its migration to Solana is slated for 8 December.

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In a Twitter thread, Crowny stated,

“Solana blockchain offers extremely low costs per transaction and ensures limitless scalability for years to come. This cutting edge architecture is all about speed. It’s the fastest blockchain around. As hardware improves, so does the network.”

At press time, Ethereum’s gas fees were high, with an ERC20 transfer costing around $22.63 on average.

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Source: Etherscan

Moving day is here

Choosing Solana over Ethereum isn’t a novel incident. In July 2021, Powerledger, an Australian company in the area of technology and energy, decided to move its platform from Ethereum to Solana.

Co-founder and executive chairman Dr. Jemma Green had commented,

“Our new blockchain platform based on Solana will be tens of thousands of times faster than Ethereum but also energy efficient. As we started this project to allow renewables to be scaled, part of our mission is to be light on our own carbon footprint.”

Another example is the privacy-protecting Internet browser Brave. The company announced a partnership with Solana at the Breakpoint Lisbon event in Portugal. Brave’s official release stated,

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“High transaction fees seen on Ethereum (due to increased interest in crypto and DeFi) have held some users back from transacting. Solana is the fastest blockchain in the world and provides the opportunity to scale blockchain transactions for as little as $0.001 – $0.002 USD per transaction, providing significant cost savings for users.”

Furthermore, the Brave crypto wallet is set to integrate Solana in 2022, for decentralized app support.

Looking at these migrations and the reasons for the same, it appears that speed, fees, and energy efficiency are thorns on Ethereum’s side.

Time to pull out the roadmap

Needless to say, there’s a lot of pressure to bring Ethereum up to speed – literally. At the last All Core Devs meeting, Ethereum developers discussed diverse proposals to reduce transaction fees, which are also rising in rollups. 

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Developer Tim Beiko also noted that time was of the essence. He claimed that the proposals needed to ship before a fork in February. 

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