Sam Bankman-Fried’s Crypto Token is the Top Performing Asset of the Year
One of the blockchain projects closely linked to the disgraced entrepreneur Sam Bankman-Fried is resurfacing, almost a year after his crypto empire collapsed, bringing relief to the digital-asset industry overshadowed by his downfall.
Solana’s SOL token has gained about 340% to $41 in 2023, outpacing market bellwether Bitcoin’s 114% gain and emerging as the best-performing token among the major cryptocurrencies tracked by Bloomberg. That follows a 94 percent drop last year when Bankman-Fried’s FTX and Alameda Research — two major backers of the project — collapsed into bankruptcy.
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The token has doubled over the past 30 days with the launch of the Firedancer software solution and a broader rally in the crypto market. The testing of the Firedancer network was announced this week at the Solana-themed Breakpoint conference in Amsterdam, which attracted blockchain developers, investors and users.
Solana is one of the blockchains competing with Ethereum, the main commercial highway of crypto, for a bigger share of the digital asset activity. It differentiates itself by offering lower transaction costs and faster processing speeds. VanEck Associates wrote in a recent report that the Firedancer upgrade “promises to exceed Solana’s current capacity by a factor of 10.”
Matthew Sigel, director of digital asset research at VanEck Associates, told Bloomberg that SOL’s resurgence this year is evidence that the project has moved beyond FTX.
“One or a handful of layer one smart contract platforms will likely capture most of the value conveyed by open source blockchains. We believe Solana is undervalued based on the likelihood that SOL will be the first blockchain to host a 100 million user application,” Siegel said.
Often riddled with blackouts, Solana has seen just one such incident this year, compared to 14 in 2022, according to Solana’s state.
Despite this year’s recovery, SOL still trades at a fraction of the $260 reached in 2021 during the pandemic-era frenzy that lifted the crypto. And some market watchers say the network still faces additional challenges.
“In the upcoming bull cycle, Solana will face tougher competition than the previous cycle,” said Kunal Goel, research analyst at Messari. “We are witnessing the rise of blockchains competing with Solana’s speed, such as Sei, Aptos and Sui.”
Nevertheless, there has been strong institutional interest in SOL, as it is the best-producing altcoin in terms of revenue streams. In October, SOL netted $67 million through exchange-traded products, second only to Bitcoin, according to data shared by asset manager CoinShares.
A recent survey of digital asset fund managers by CoinShares also found that around 7% of respondents believe Solana has the most compelling growth prospects, up from 3.4% last year.
“People are watching the movements of FTX real estate [and] I think people realize that the selling pressure is probably not as big as expected,” said Shiliang Tang, chief investment officer at crypto investment firm LedgerPrime.
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