Our analysis: 2023 will be a turning point for Solana

There is a huge amount of talk on social media about the future of the Solana blockchain, which is quite problematic after the collapse of FTX. To better understand this topic and not drown in this endless holy war, we have collected both arguments of the project’s haters and fresh counter-arguments from Solana’s founders.

Why do people call Solana a scam?

One of the most famous arguments is that FTX pumped money into Solana’s fame for marketing purposes. Can Solana compete with other Ethereum-killers without FTX’s promotion? What is this project actually like without this advertising veil?

James Spediacci, the author of a well-argued thread critical of Solana, also asks this question:

Solana was backed by one of the biggest frauds in history. The media portrayed him as a boy genius wunderkind, which made people want to invest in this average blockchain. Now he is disgraced and facing life in prison.

FTX committing fraud and stealing customer funds to invest in Solana projects was the main reason anything was successful on Solana. Now all that money is gone and FTX will forever be negatively associated with Solana.

Many celebrities were paid to promote and shill Solana for FTX as spokespersons. It’s become clear that Solana was used by FTX as one piece of their elaborate scam to help keep the FTX / Alameda ponzi going.

James also accurately points out that Solana’s notorious speed (TPS) has the downside of disrupting blockchain stability. Technically, it’s usually better to address blockchain scaling problems by creating Layer-2 solutions, as Bitcoin and Ethereum do.

In other words, Solana wanted to be both a racing car and a reliable armored car to transport money. So far, it has yet to succeed in combining it — simply because these qualities are fundamentally incompatible.

#Solana $SOL lost 97% of its developers! 🤯

the two biggest projects deGods and y00ts indicated they’re migrating to ETH (35% of current chain volume) pic.twitter.com/ZSFOabjUgv

— Dagnum P.I. (@Dagnum_PI) December 26, 2022

James Spediacci writes exactly about this:

In addition to many projects choosing to return to or build on Ethereum because of the advancement of Layer 2 technology as well as the constant network outages plaguing Solana. 

The two biggest NFT projects on Solana are leaving for Ethereum. All roads lead back to Ethereum.

We have also previously cited these and other critical arguments against Solana, which most often remain unanswered by the Solana team. And meanwhile, notable projects keep leaving the blockchain.

Some moderate optimism from Solana officials 

In their recent Q&A session, Solana founders Anatoly Yakovenko and Raj Gokal tried to answer many problematic questions from the community. 

The general sense of the answers can be summarized as follows — Solana is doing well, but during the crypto winter, all projects are going through difficult times. The impression was that the speakers were making more excuses and reassuring their audience.

In the comments, many people also pay attention to the speakers’ uncertainty about the future:

https://twitter.com/olex_trust/status/1607756723653165056

As an example from this long dialogue, here is the answer to the reasons why Serum, an important project for Solana, closed right after the collapse of FTX (we wrote about this mysterious story here):

Yakovenko: During the FTX collapse, somebody started withdrawing funds from FTX and people weren’t sure if it was hacked or if they were real transfers. It seemed like FTX itself was being compromised.

Developers knew already that the Serum program was not controlled by a DAO: It was controlled by keys that were custodied at FTX, so there was a fear that those keys were compromised as well.

People just started working on forking the Serum program — by taking the exact same open source code and re-deploying it under a new address with different upgrade authority to different keys.

That moment was like a psychological turning point for me, because it really felt like everything was falling apart. But seeing all the developers come together, I was able to be like: “Okay, there are people that know what they’re doing, that actually understand these very sophisticated systems and how to fix it.”

So far, only one thing is clear — 2023 will be a turning point for Solana. Either the project will rebuild and prove its viability regardless of a wealthy sponsor (who is already gone), or Solana will enter the stage of its gradual sunset, which many Ethereum-killers have passed before.

Developers leaving Solana.
Traders leaving Solana.
Creators leaving Solana.
DeGods leaving Solana.

A blockchain "built for developers" that pivoted to cash grabbers, invested in FTX, now can't even keep their biggest projects on their blockchian.

Where do they go from here? pic.twitter.com/72A1Dmy0iF

— HashBastards (@HashBastardsNFT) December 26, 2022

How can I make money on this?

Whether Ethereum killers and marketing monsters like Solana and Aptos will survive in the long run without outside infusions of money is still a big question. At least a new life is definitely starting for them in 2023. And suppose there is anything still to buy in such a winter market. In that case, it is better to buy into giants like Bitcoin and Ethereum, which have better chances to survive than shitcoins rapidly losing their capitalization.

But if you’re still a Solana fan, now might be the best time to buy the dip — just now, Solana’s price is at its lowest point this year. We want to warn you that betting on such blockchains with unclear fate is extremely dangerous now, so think twice before you spend your money.