Note: This has all been previously covered by Cryptonary Research. This report aggregates all of the information for you.

The Facts

• FTX and Alameda hold around 58m SOL (11% of supply), unlocking linearly each month until Jan 2028.
• FTX will need to sell this sooner or later, “when” that happens is up to the bankruptcy proceeding courts. Probably takes years.
• Alameda provided much of the liquidity to the Solana ecosystem (through its market-making operations), as well as backing a large number of protocols in the ecosystem.
• DeFi on Solana has been badly wounded, with total value locked (TVL) going from $10bn at its highs, to $286m at the time of writing.

Check out the below update from our AMA on 19th November, just after the FTX collapse, for a more detailed update:

[embed]https://youtu.be/toa4GrUvM9k?t=1127[/embed]

DeFi

Solana was a huge benefactor of the extortionate gas fees we saw on Ethereum last year. It grew from $150m TVL to $10bn in only 9 months.

Then came Layer 2s like Arbitrum and Optimism. Benefitting from Ethereum’s security, with low gas fees, and token airdrops, they took market share.

Solana was by no means defeated, but it was in a lull. The FTX fiasco came at a bad time, clearly. Layer 2s are bolstering with developers, innovative protocols, airdrop opportunities, and public interest. At the same time, Solana is suffering from fraud, dumps and outages.

DeFi on Solana is on its knees. Not dead, but struggling. Will it be able to come back? If DeFi is dead, is there anything left? That’s what we’re exploring today.

The Future of DeFi

Solana was heavily influenced by FTX and Alameda. The key to DeFi returning is developers picking up the slack.

There are rumours of Solana-based protocols making enquiries with other chains. Looking into the feasibility of moving chains.

The future of Solana DeFi is entirely dependent on developers sticking around and building through this. Creating innovative products that are unique to the ecosystem.

This will take time though, with L2s taking the spotlight in the meantime.

What if DeFi is Dead?

DeFi on Solana can survive, but its future is entirely dependent on developers sticking to it and burning the midnight oil.

The chance of Solana DeFi coming back to its former glory, though, are low. Especially with EIP 4844 bringing layer 2 gas fees in line with Solana. More security, arguably better tech (no outages!), same transaction costs. Easy maths really. Solana DeFi’s unique selling point is being eroded, and FTX fallout is speeding up the process.

So, what happens if FTX and Layer-2s fatally wound Solana DeFi? What can Solana offer that other chains can’t?

NFTs

Solana’s NFT market is bustling. 2nd only to Ethereum. It’s often considered to have a more active community, both in developers and fanatics. Its foothold in this niche is clear, and with a bright future for NFTs, has high potential.

Gaming, music, tickets for events, passes for chat rooms, viewings, IRL events, and much, much more. NFTs clearly hold a place in the real and virtual worlds that is yet to be realised. If Solana is able to become the home of NFTs, the sky is the limit.

Conclusion

FTX has wounded Solana DeFi. Already injured, it’s now bleeding heavily. Whether it survives is a question for developers. If they jump ship, it’s over. Not for Solana, but certainly for its DeFi.

Regardless, Solana has a corner of the NFT market and needs to double down. Again, this comes down to developers. With such an active NFT community it seems likely.

When it comes to the SOL token, it’s trading at historically low prices. Not expecting anything major (such as ATHs) for at least 18-24 months and this is conditional on developers sticking around and innovating.

This is for a very good reason, and quite honestly, there are better places to park your capital right now, and many opportunities coming up (did someone say layer 2 airdrops?).