Is Solana Facing an Existential Threat Like FTX Did? (2024)

The Solana network has been grappling with a significant surge in transaction failures, with approximately three-quarters of all transactions experiencing issues amidst the frenzy of activity sparked by the recent meme coin craze.

Market players believe that the current crisis is an “existential moment as big as the FTX collapse.”

Solana’s Failed Transaction Climbs 75%

According to the latest data from Dune Analytics on April 4, over 75% of “non-vote” Solana transactions failed, marking the highest negative rate recorded.

This increase in transaction failures has been accompanied by a growing outcry from Solana users on social media platforms, who are expressing frustration over unsuccessful transactions and a decline in user experience.

Popular pseudonymous trader Altcoin Sherpa maintained optimism about Solana’s potential as a network for retail adoption but acknowledged the current less-than-ideal user experience.

Contrary to the widespread belief, in another April 4 post, Mert Mumtaz, a vocal proponent of Solana and the CEO of Helius, disputed the claim that 75% of transactions were failing, attributing the majority of unsuccessful non-vote transactions to “bot spam.”

Mumtaz went on to liken these “failed” transactions to web2 operations to clarify their nature.

According to the exec, many failures occur when the blockchain’s smart contract deems a request invalid due to reasons like permission issues or market fluctuations rather than faults with the blockchain itself. He argued that the real challenge isn’t Solana’s throughput but rather the overwhelming volume of spam transactions.

Although transaction failures may not trouble every Solana user, these instances do impair the chain’s functionality and lead to frequent service outages, mirroring the network’s historical track record.

Solana Crisis to FTX Collapse

Spectra Cities’ founder, Ryan Rzepecki, also weighed in and highlighted the importance of different applications being able to operate seamlessly on the same chain and the significance of composability over sovereignty.

Rzepecki further went on to stress the critical need for the smooth functioning of various activities, such as payments, governance, and other essential functions, without disruption from activities like meme coin trading and also drew a parallel between Solana’s current crisis and the FTX collapse, underscoring the magnitude of the challenge the Layer 1 network faces.

“This is an existential moment as big as the FTX collapse. Sending positive vibes to all the smart developers working to fix this. To be clear, I am very confident these are solvable problems. But Solana is losing the confidence of users and major ecosystem partners every day things operate like this.”