Solana scrambles to adjust after $22bn memecoin wipeout

Solana’s terrible, no-good, rotten tally seems to cognize nary end.

SOL plummeted different 9% connected Monday, to conscionable nether $153.

The cryptocurrency has tumbled much than 37% successful the past 30 days, which is worse than Ethereum’s 19% decline, according to CoinGecko.

The reason, it appears, is the merchandise that utilized to beryllium a Solana spot — memecoins.

By embracing memecoins, Solana’s marketplace worth raced up of rivals successful 2024 and spurred speculation, yet again, that it could leapfrog Ethereum.

Now a drawstring of scandalous memecoin releases person drawn superior blowback.

Outrage

On February 14, the Libra memecoin promoted by the crypto-loving president of Argentina, Javier Milei, cratered soon aft insiders made a killing.

The occurrence triggered outrage successful the South American federation and the crypto marketplace writ large. And Solana, arsenic it’s done galore times successful the past year, hosted Libra.

Even so, immoderate analysts expect Solana to upwind the storm.

Carlos Guzman, an expert astatine market-making steadfast GSR, expects different applications connected Solana to thrive, including offerings successful the payments, DeFi, and artificial quality sectors.

“There are further reasons to beryllium optimistic astir Solana, including a imaginable SOL ETF and coming regulatory clarity, which are apt to boost capitalist confidence,” Guzman told DL News.

Yet there’s nary getting astir the information that Solana is enduring its worst circular of contention since the web suffered a fig of outages successful 2022 and 2023.

Solana did not respond to a petition for comment.

In January, critics lambasted President Donald Trump and his wife, Melania Trump, aft they launched memecoins connected Solana. Both the Trump and Melania coins skyrocketed earlier cratering.

Hawk Tuah effect

The token launched by Haliey Welch successful December, the net personage down the raunchy “Hawk Tuah” meme, met a akin fate.

“When Melania launched aft Trump, it brought the realisation location that immoderate teams were purely extractive and truly stole the thunder of the Trump launch,” Chris Chung, laminitis of Solana trading level Titan, told DL News.

“The past question with the Libra coin was the nail successful the coffin.”

Solana’s dependence connected Pump.fun, a memecoin mill that makes it casual to motorboat the tokens, isn’t helping.

When memecoins surged connected January 23, tokens launched connected Pump.fun made up much than 75% of each the tokens introduced connected the full Solana network, according to information from Solscan and Dune.

‘A permissionless marketplace is 1 thing, but validating scams kills the different plus classes.'

Many crypto investors are not amused astatine the cascading losses memecoins are generating.

More than 86% of wallets that bought Milei’s memecoin, for instance, ended up losing money, according to probe from Nansen.

“Memecoins penetrated the caput stock that was antecedently attributed to existent projects,” Ivan, the pseudonymous cofounder of the decentralised concern task Gearbox Protocol, told DL News.

“A permissionless marketplace is 1 thing, but validating scams kills the different plus classes.”

Turning a page

Solana’s leaders are scrambling to marque adjustments.

Mert Mumtaz, CEO of Solana developer level Helius, announced helium was hiring a forensic researcher to assistance forestall fraudulent enactment conscionable days aft Libra crashed.

Brian Armstrong, the CEO of Coinbase, said connected X aft the Libra plunge that “some memecoins person intelligibly gone excessively far,” and called connected the manufacture to “purge the atrocious actors.”

Similarly, Edward Wilson, the selling pb astatine DeFi task OneBalance, said cleaning up crypto’s enactment from chaotic memecoin launches indispensable travel from wrong the industry.

“There needs to beryllium precise beardown pushback against these ideas and these products,” said Wilson. “They truly bash prey and are predatory.”

Debacle

As for Solana, GSR’s Guzman said precise small has changed for the network’s prospects.

“Claims of Solana’s demise owed to this debacle are exaggerated,” helium told DL News.

“Memecoin mania would yet dice down fixed its zero-sum quality and the information that astir participants suffer money.”

Liam Kelly is simply a Berlin-based newsman for DL News. Got a tip? Email him astatine [email protected].