The collapse of FTX and Alameda Research sent shockwaves across the entire cryptocurrency ecosystem, triggering a cascade of bankruptcies, market panic, and a sharp decline in asset values. Among the hardest hit was Solana (SOL), a high-performance Layer 1 blockchain that had surged in popularity during the 2021 bull run. With Alameda reportedly holding around $1.2 billion in SOL as of June 30, the fallout from its downfall inevitably cast a dark shadow over the network.
In the weeks following the crisis, SOL plummeted from $35 to a low of $11—a 68.5% drop—and now trades nearly 95% below its all-time high. This dramatic devaluation raised urgent questions about Solana’s resilience: Can it survive this crisis? Is its DeFi ecosystem at risk? Could the network itself become compromised?
Let’s examine the impact on Solana’s security, stability, and decentralized finance (DeFi) landscape—and explore whether this blockchain is truly down for good.
Network Security Under Pressure
A 60% drop in a Layer 1’s native token within 72 hours is more than just a market correction—it’s a full-scale stress test. Such volatility doesn’t just erode investor confidence; it threatens the very foundation of network security in proof-of-stake (PoS) systems.
When SOL’s price crashed, so did the dollar value of staked tokens securing the network. Between Epoch 370 and Epoch 378 (roughly nine epochs), over 54.6 million SOL were undelegated, reducing the total staked supply from 411.2 million to 356.6 million—a 13.2% decline. At peak outflow between November 7–10, 29.1 million SOL (53% of total outflows) were pulled from staking.
The financial weight behind network security collapsed even faster. The dollar value of staked SOL protecting the network dropped 65.3%, from $14.7 billion to just $5.1 billion.
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Thankfully, the Solana Foundation intervened by postponing its planned unlock of 28.5 million SOL at the end of Epoch 370—an action that likely prevented even greater destabilization. Despite these massive withdrawals, Solana did not suffer any major attacks or consensus failures.
Even after the exodus, Solana remains fourth in total dollar value staked among PoS networks tracked by Staking Rewards, though its staking ratio ranks 19th. This demonstrates a critical point: the network held up under extreme pressure.
While 100% uptime is expected of any robust blockchain, Solana’s performance during this crisis is noteworthy given its history of outages. The fact that it remained fully operational through such turbulence signals meaningful progress in reliability and resilience.
Stability Challenges—and Signs of Improvement
Solana has long struggled with stability during periods of high congestion. Since September 2021, the network has experienced four full outages totaling over 37 hours of downtime. These incidents were often triggered by surges in transaction volume—especially during volatile market conditions when users rush to manage leveraged positions or execute arbitrage trades.
However, during the FTX crisis, despite intense market activity and panic-driven transactions, Solana experienced no performance degradation or downtime.
This improvement can be attributed to recent upgrades such as stake-weighted Quality of Service (QoS) and the rollout of QUIC protocol support on mainnet, which help prioritize legitimate traffic and reduce spam-induced congestion. Additional enhancements like fee markets and dynamic transaction pricing are expected in the coming months.
These technical refinements appear to be paying off. For a network once criticized for fragility, maintaining uninterrupted operation during one of crypto’s most chaotic episodes is a strong vote of confidence in its evolving architecture.
The DeFi Crisis: Liquidity Crunch and Ecosystem Fallout
Liquidity Dries Up Across SOLFi
The broader Solana DeFi ecosystem—often referred to as "SOLFi"—faced severe strain post-FTX.
Total Value Locked (TVL) across Solana-based protocols fell 72.1%, dropping from $1 billion to just $278.3 million in dollar terms. While part of this decline reflects falling asset prices (especially SOL, ETH, and BTC), the story in native token terms is more telling.
SOL-denominated TVL dropped 27.5%, from 27.2 million to 19.7 million SOL—indicating real capital flight rather than mere price depreciation.
Stablecoin supply also contracted sharply. The total stablecoin market cap on Solana shrank 46.1%, from $3.9 billion to $2.1 billion. A major driver was Tether’s migration of $1 billion in USDT from Solana to Ethereum on November 18—accounting for over half of all stablecoin outflows.
Such movements signal reduced trust in Solana’s short-term stability and highlight how quickly confidence can erode when key players falter.
Serum’s Collapse and the Ripple Effect
No project exemplifies the fallout better than Serum, a centralized orderbook-based DEX built on Solana and closely tied to Alameda Research.
Serum’s governance token, SRM, became emblematic of flawed tokenomics: low circulating supply with an inflated Fully Diluted Valuation (FDV). Even after losing 69.2% of its value, SRM still carried a staggering $2.4 billion FDV—making it vulnerable to manipulation and unsustainable lending practices.
More critically, Serum’s upgrade authority keys remain controlled by FTX—a single point of failure that puts the entire Solana DeFi stack at risk. Projects like Raydium, Zeta Markets, and PsyOptions depend on Serum’s infrastructure. If those keys are ever used maliciously ("rug pull"), the consequences could be catastrophic.
Unsurprisingly, Serum’s TVL has collapsed by 99.6%, now sitting at just $434,000. In response:
- Raydium paused market-making on its DEX.
- Zeta Markets halted deposits.
- The community launched OpenBook, a permissionless fork of Serum, which has already attracted $1.5 million in TVL.
While OpenBook’s long-term viability remains uncertain, it offers a decentralized alternative that reduces reliance on FTX-controlled infrastructure—a necessary step toward true resilience.
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Is Solana Dead? No—but It’s Fighting to Rebuild
Solana is undeniably weakened. Its price remains depressed, key ecosystem projects have faltered, and lingering uncertainty surrounds Alameda’s remaining holdings and potential liquidations.
Yet calling Solana “dead” would be premature—and inaccurate.
Despite everything:
- The network stayed online.
- Core infrastructure remained functional.
- Developer activity remains strong: A recent hackathon saw 750 project submissions.
- NFT trading volume denominated in SOL grew 102% month-over-month, indicating sustained organic demand.
Moreover, losing FTX may ultimately benefit Solana’s long-term decentralization. Freed from undue influence by a single powerful entity, the ecosystem may evolve into a fairer, more community-driven platform.
Yes, technical concerns persist—particularly around scalability and architectural sustainability compared to modular blockchains. And yes, developer retention will be tested as markets remain bearish.
But history shows that crypto networks often emerge stronger after existential crises.
Frequently Asked Questions (FAQ)
Q: Why was Solana so heavily impacted by FTX’s collapse?
A: Alameda Research held approximately $1.2 billion in SOL at one point and was deeply integrated into Solana’s ecosystem through investments and protocol development (e.g., Serum). This close relationship created systemic risk when FTX failed.
Q: Is Solana still secure after the mass unstaking?
A: Yes. Despite a 65% drop in the dollar value of staked SOL, the network maintained full functionality without downtime or attacks. It remains among the top PoS chains by total staked value.
Q: Can Solana DeFi recover without Serum?
A: While Serum played a foundational role, forks like OpenBook and growing adoption of alternative DEXs suggest the ecosystem can adapt. Full recovery depends on restoring liquidity and trust.
Q: Will Alameda sell more SOL during bankruptcy proceedings?
A: It’s likely. Any remaining SOL holdings will likely be liquidated as part of court-supervised asset distribution, potentially creating further downward pressure on price in the short term.
Q: Is Solana becoming more decentralized after FTX?
A: Potentially yes. The removal of FTX/Alameda’s centralized control—especially over projects like Serum—creates space for more community-led governance and development.
Q: What are Solana’s biggest challenges moving forward?
A: Rebuilding liquidity, ensuring long-term network stability, addressing centralization risks, and competing with emerging modular blockchain architectures while retaining developer interest.
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While Solana faces an uphill battle, its ability to withstand one of crypto’s worst crises without breaking is a testament to its improving resilience. The road to recovery will be long—but far from impossible.