The Decline in Solana Users: What’s Behind the Drop in Activity?
SOL faced challenges
Solana, once a beloved cryptocurrency during the recent bull market, has also been a source of significant controversy. In 2022, the network experienced multiple major disruptions, with the most recent one occurring in February. During that time, the entire network came to a complete halt.
The developers also faced a lawsuit, as the SOL token was allegedly issued as an unregistered security. As a result, many investors suffered significant losses when SOL’s value plummeted during the bear market. The situation was reminiscent of Ripple’s ongoing struggles.
From its peak to the current bottom, the token lost 96% of its value. Furthermore, Solana was closely intertwined with major non-fungible token (NFT) trading platforms and FTX’s sister company, Alameda Research. When Alameda faced bankruptcy, numerous tokens on Solana encountered difficulties.
Fortunately, there is also positive news. It was revealed earlier this year that the network has experienced substantial growth, partly due to Solana’s low transaction fees. The transaction costs of Bitcoin and Ethereum were particularly high earlier this year, prompting many users to switch to Solana.
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Declining activity on Solana
However, it seems that investors are gradually throwing in the towel. The number of active Solana users has dropped to a level not seen since the end of 2020, according to on-chain data from The Block. As of now, there are approximately 205,000 active addresses.
The number of new addresses is also continuing to decline, reaching levels not seen since the end of 2021. The fall of FTX and, consequently, Alameda Research is seen as a significant factor contributing to this decline. At the time of writing, the price of Solana is around $19 or approximately €18.
I will continue working on this article and provide more detailed information on Solana’s decline and its impact on the cryptocurrency market.