Solana slips 15% on congestion news, lost 40% in a week

Solana’s native cryptocurrency (SOL/USD) has lost another 15% today, bringing its weekly losses to almost 40% and slipping under $90. The Solana blockchain continues to face major network congestion issues. The token has been in freefall amid a market slump, losing nearly 60% since reaching an all-time high in November 2021, CoinGape wrote.

48 hours of instability

Over the past two days, the Solana network has been unstable, disappointing traders and investors alike. On January 22, engineers published the following notice on the Solana website:

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Solana mainnet beta is experiencing high levels of network congestion. The last 24 hours have shown these systems need to be improved to meet the demands of users, and support the more complex transactions now common on the network.

Systems fully operational, but for how long?

On Monday, January 24, the status shows that Solana network is fully operational again. However, it seems the damage has been done. Its frequent outages are leading some traders to lose trust in the Solana ecosystem as a whole.

Other Ethereum (ETH/USD) Layer-1 competitors like Fantom (FTM/USD) and BSC have been gathering momentum as a result. Founder of Boolean Fund and crypto investor Mark Jeffery wrote:

Another day, another 48 hour Solana outage. This is like the sixth time this has happened in 3 months. I have zero faith in it now. It is the new EOS. The fight is now between ETH, BSC, Fantom, Avalanche and Terra.

Solana market share declining

Against the backdrop of frequent outages, people have started to doubt that Solana is the real Ethereum killer. Its share of DeFi TVL is declining as DeFi traders opt for affordable alternatives like Avalanche (AVAX/USD), Fantom, and Terra (LUNA/USD). After Ethereum, Fantom is the largest network in terms of DeFi TVL.

Solana has also slipped to eighth position with a fully diluted market cap of less than $45 billion according to current CoinMarketCap data. They are trying to reverse losses and planning additional network fixes in the near future. The engineering team wrote:

The forthcoming releases are aimed at improving the state of the network, with more improvements expected to roll out in the next 8-12 weeks. Many of these features are currently live on Testnet, where they are being rigorously tested.