On Monday, the Solana Foundation explained that it has 3.24 million common stock shares in Sam Bankman-Fried’s crypto exchange, which recently declared bankruptcy, as well as tens of millions of dollars worth of cryptocurrency that is currently stranded on FTX.
Solana’s deep financial ties to FTX are represented by their significant holdings. These point to the creation of FTT token and Serum, an on-chain crypto exchange created by Bankman-Fried. This was highly influential inSolana based decentralized finance (DeFi).
This deep tie between the two companies, Solana and the now bankrupt FTX is causing the Solana Foundation a lot of headaches as investors lose confidence in their platform.
Solana in more trouble
It has now turned out that SOL is a bad investment with no short term prospect for any investor. SOL’s price has plummeted over 60% and people continue to dump it.
On Nov. 6, the Solana Foundation said in a blog post that it held 134.54 million SRM tokens and 3.43 million FTT tokens on FTX when withdrawals went dark. Those assets are currently worth $29.3 million and $4.4 million respectively, according to CoinGecko market prices; they were both around Worth $107 million and $83 Million one day prior to the freeze..
The market is not kind as people dump more and more SOL choosing instead to find better investments such as Uniswap, Trust Wallet, and Toon Finance’s Toon Swap.
FTX’s bankruptcy last week continues to have serious consequences throughout Solana, many of which are affecting the price of SOL negatively- it is down 57% in the past seven days. However, FTX also played a role in managing infrastructure for crucial Solana DeFi protocols, and now that they have collapsed individuals using those services are facing difficult times as well.
Solana is collapsing along with FTX
While Solana remains a solid technology on paper, the reality is that a lot of Solana’s day-to-day function was handed over to FTX. Their tie was so deep that core company features were given to FTX to handle and now SOL’s price is in the gutters while anything related to DEX or decentralized exchanges soared like Trust Wallet Token that managed to break into $2, and Toon Finance Token or TFT that practically doubled in price since its release.
Solana having deep ties with FTX and other CEX central exchanges made the collapse worse
Upon research, it was found that many trading projects on Solana use wrapped assets called “Sollet assets” as substitutes for bitcoin, ether, ada, xrp, and other non-native cryptocurrencies. Following this collapse, a number of protocols are now left with backed debt.
As of Nov 10, 2022, the total value of Sollet-based assets in circulation on Solana is thought to be around $40 million. The present status of these underlying assets is not known.
This information being unavailable further deepens the worry of everyone who invested on SOL and finally shakes the confidence of whales who usually play the long game by buying into ICO of good projects like Toon Finance.
Is there hope for Solana? Toon Swap DEX is the answer.
Although other aspects of the crypto market appear to have been hit hard by recent events, the Solana Foundation seems to have weathered them relatively well. It held less than $1 million in assets on FTX when withdrawals were halted–a far cry from some other foundations who lost most or all of their SOL during that time. As a result, “The impact on Solana Foundation operations is negligible,” according to a blog post published by the foundation.
Toon Swap DEX and SOL
Toon Swap is a DEX or decentralized exchange by Toon Finance who got a surge of token buyers and investors after FTX and Solana crashed since people remembered that DEX is superior to CEX when it comes to security.
Toon Finance Token rose along with Trust Wallet TWT while Solana SOL lost about 60% of its value and even something like Binance BNB lost about a hundred dollars per token price or nearly 30%.
Other CEX, centralized exchanges and centralized financial institutions are showing ties to FTX
In light of the recent FTX and Alameda scandal, trading firms have been disclosing their level of exposure to the two firms. FTX had loaned a total of $8 billion in customer deposits to its sister company- a clear violation of its own terms which ultimately led to last week’s events.
DEX does not have ties to FTX and can never collapse like CEXs
A DEX like Uniswap, Biswap, Pancake Swap, and Toon Swap takes a non-custodial role in cryptocurrency trades. This means that you don’t have to give the exchange your money and keeps things private as they do not ask for your identification as well.
This means that DEXs are safe from any collapse that CEXs might experience, and traders should be encouraged to use DEX for a more secure trading experience. With the recent events of FTX, Alameda, and Solana Foundation’s failure, traders have been given an important lesson in decentralization as only decentralized exchanges are immune from such collapses.
Solana Foundation has direct ties not just with FTX but also Sam Bankman-Fried
Sam Bankman-Fried, FTX’s former CEO, was a key supporter of Solana. Solana is a smart contracts platform that has various decentralized finance protocols which are powered by the native SOL token. This is similar to how Ethereum uses its “gas” token ETH.
Can Solana recover like Ethereum and rise like Toon Finance Token?
While Solana still has a solid albeit compromised platform, it doesn’t have a use-case that’s comparable to Ethereum so only “cryptocurrency gamblers” are taking a look at this token.
Ethereum dropped almost 20% in total since FTX collapsed but remains a solid investment since it has multiple use-cases and has high demand.
Toon Finance Token or TFT on the other hand almost doubled its price since release despite FTX collapsing where most tokens dropped.
More of Solana’s assets lost to FTX collapse
Bankman-Fried’s exchange and trading firm had bought a total of 58,086,686 SOL tokens from the Foundation and sister entity Solana Labs since August 2020, the blog post said. The Foundation said it is unsure what will happen to those assets during bankruptcy proceedings.
Unbelievably so, a central exchange collapsing like FTX and taking others with them like Solana Foundation is commonplace when it comes to CEXs or central exchanges while this type of problem has never occurred with DEX or decentralized exchanges.
This is why the price of Toon Finance Tokens almost doubled in just a couple of weeks, making initial investors happy as they got almost 100% appreciation for TFT.
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