GM PRO Doers!
I don’t know about you but “Is Solana Dead?” seems to be the question I’m seeing all over Twitter and in my inbox.
A few of you PRO members also asked that I answer this question with on-chain analysis. So here we are. 🤷♂️
Let’s get down to business.
What’s Happening on Solana?
There’s no doubt that Solana is down bad…
Just look at the price chart below. In the last 14 months, the price of SOL (Solana’s native token) went from around $260 down to <$10 and is now sitting at just above $16 at the time of writing.
At its lowest, SOL dropped a cute +97% from all-time highs. 👀
To make matters worse, one of the top NFT projects on Solana, DeGods, recently announced it’s moving to Ethereum and the team's second project, Y00ts, is moving to Polygon as well.
Of course, all of this is happening on the back of one of SOL's biggest holders (>10% of total supply) and the broadest Solana ecosystem investors, FTX, falling bankrupt.
There is no doubt that things look bad for Solana.
However, those who were around back in 2018 know that we experienced a somewhat similar scenario with Ethereum.
In 2018, the price of ETH fell from its (then) all-time high of $1,428 down to around $85, resulting in a 94% drop in the price of ETH. 🤷♀️
The crypto and web3 space were very different back then, but many projects and businesses ran out of money, people were fleeing the space, and it left many, even the most committed to Ethereum, wondering if it was going to make it.
Thankfully, the Ethereum community pushed through the depths of a long crypto winter, and the vibrant and flourishing Ethereum ecosystem we know today exists.
Now, you may be wondering why I’m talking about Solana’s price on Milk Road since it’s an area we don’t tend to cover.
Well, the reason is this…
If there is one thing I’ve learned following Ethereum for all of these years, it’s that there is a big difference between Ethereum the blockchain, and ETH the currency.
This is also true of Solana the blockchain and SOL the currency. So while the price of SOL looks unbelievably terrible, it may not reflect what is happening to Solana the blockchain, and its community.
In fact, take a look at this logarithmic price chart of the Amazon stock below.
In 2000, the price of AMZN dropped 94.79% down to $4. For some context, Amazon's most recent all-time high was $165 and over its 26 years of trading on the stock market there have been:
- Seven times when the price dropped more than 30%
- Four times when the price dropped more than 50%
- And three times where the price dropped more than 60%
What a ride! Yet, Amazon is one of the largest companies in the world (it’s currently down more than 50% from its ATH though lol). 📉
The point is this, the price is irrelevant to the underlying technology. Prices of technologies will always fluctuate and can sometimes significantly “de-peg” from their fundamental value.
And this doesn’t matter because network effects are the true driver of technological adoption.
Why Network Effects Are Important
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