Key Takeaways:
- Why holding Solana for the long haul could backfire
- Solana Network is susceptible to hacks.
YEREVAN (CoinChapter.com) – Solana (SOL), a layer-one blockchain that was hailed the “Ethereum killer,” suffered heavy losses year-to-date. However, there are other troubling factors aside from the broader economic headwinds.
Here are three reasons why holding Solana for the long haul could backfire.
#1 Solana is plagued with outages
Solana is a blockchain that uses a combination of proof-of-stake and proof-of-history consensus mechanisms. The timestamps allow very fast sequencing of validators. As a result, Solana block time is 400 milliseconds, with a throughput of up to 50,000 TPS.
However, the network has suffered more than its fair share of outages. The blackouts result from either a misconfigured node, bugs in Solana’s code, or the network getting overwhelmed by artificial traffic from bots.
The latest halt came between Sep 30 and Oct 1, when the network was unresponsive for 6 hours. A Solana validator blamed a misconfigured node at the time.
It appears a misconfigured node caused an unrecoverable partition in the network. Validators, please participate in finding consensus on the relevant data.
they tweeted.
There were also outages in May, June, and September 2022, with the network unavailable for 7-18 hours each time. Solana co-founder Anatoly Yakovenko admitted that the network outages are Solana’s biggest challenge. Thus, the team has made finding a lasting solution to the outages the number one priority. However, no solution has been found so far.
#2 Million-dollar hacks
Solana Network is susceptible to hacks. The latest heist on Oct 11 took $117 million off the DeFi protocol Mango Markets. “The attacker manipulated a price oracle; this enabled the attacker to manipulate the price of the protocol’s governance token MNGO and to take under-collateralized cryptocurrency loans,” commented the Digital Trend on Oct 13.
The attack led to a drop in the Total Value of assets Locked (TVL) on Solana by 24% the day following the attack. The TVL continued to drop, bringing the total losses since Nov 2021 to over 91%. As a result, Solana TVL stood at $896 million on Oct 14.
The attacker then held the stolen $117 million in ransom and sent an ultimatum to the Mango community, demanding the Mango treasury use its $70 million, available in USDC, to repay bad debt. Once Mango complies, the culprit has promised to send stolen MNGO and SOL tokens to an address provided by the Mango team.
Another widespread hack also hit the Solana network in August. Wallets were drained of SOL, USDC, and other Solana-based tokens. The attackers stole over $4 million worth of coins.
#3 Bearish SOL technicals
Like many other altcoins, Solana(SOL) price traded in a Bitcoin-copycat manner in Q3. As a result, the digital asset formed a bearish setup dubbed the ‘descending triangle.’ The latter entails a dropping resistance and flat support. They enclose the price action and prevent sharp moves in either direction.
The descending triangle is a continuation pattern that can forecast a drop equal to the one preceding the formation. SOL has not yet confirmed the formation and held above the support line. However, the declining trading volumes suggested a looming drop, congruent with the broader market.
If the bearish prediction pans out, the target price for SOL could stand at $10, or 65% lower than the current value.
