Let's dig into the issues that Solana has faced in the last two days. It has lost ~50% of its value over the last month and ~33% over the past week.
Why Solana?
Solana's objective is to achieve faster transaction speeds without sacrificing decentralisation.
Solana claims it can process 50k TPS vs. Ethereum's 15 TPS. Solana uses a 'stateless' structure. Unlike Ethereum, the entire network state does not need to be updated for every transaction.
A common root cause
Solana has faced 4 major network problems in the last 6 months.
Whilst there are nuances for each, the underlying causes have a common thread. The network was overloaded with too many transactions -- in some cases legitimate ones and more recently spam. In the last two days, TPS fell from 50k to a few thousands (TPS is 3k at the time of writing).
A tough 48 hours
The last 48 hours have been brutal for Solana.
All cryptocurrencies tanked in 2022 and specifically in the last 48 hours. Holders of Solana wanted to liquidate positions. When this happened, spammers took the opportunity to spam the network and congest it. This meant that users couldn't sell Solana even if they wanted to.
The fix
Solana released an upgrade to avoid further spamming.
The upgrade is intended for validators, people who process transactions and prevents them from getting spammed. If validators upgrade, the hope is that the spamming can be stopped or reduced.
Recovery
Do you think Solana can recover? If so, I'd love to hear your thesis.