The price of Solana (SOL), which remains stable despite experiencing disruption, is currently in the spotlight.Solana is one of the popular blockchain networks that experienced a significant outage for five hours on Tuesday,February 4, 2024,
The Solana (SOL) outage resulted in over $1.6 billion of crypto assets locked in DeFi applications becoming inaccessible.
Despite the disruption, the price of Solana (SOL), the native token of the Solana blockchain, showed extraordinary resilience. Despite experiencing a drop of up to 3% during the disruption period, SOL prices quickly recovered even before the network resumed operations.
This incident marks the sixth time Solana has experienced a major outage, as reported by network availability monitoring portal Solana Labs. The previous outage occurred nearly a year ago, when a number of service providers mistakenly flooded the chain with data.
Frequently Affected by Disruptions, Solana Prices Always Steady?
Solana, although it has not managed to go a full year without experiencing major disruptions since September 2021, shows the impact diminishing as time goes on. Analysis of Solana SOL price movements during each outage shows that the impact of downtime on SOL has diminished over time.
The first three major disruptions, within nine months, caused price drops of between 10% and 15% in the following twelve hours. However, the market barely responded at all to the next two disruptions, except for a brief decline of 4.2% in the initial stages of the 19-hour disruption in February.
The latest disruption likely caused the second smallest price impact of the six incidents. In fact, at one point, SOL values were nearly 2% higher while developers were working on the issue.
While an official postmortem has not been shared, reports suggest that the outage was caused by a bug in some of the code that instructs native apps on how to operate. Developers had previously identified and fixed the bug in the network's testnet, but the fix had not yet been implemented on the mainnet.
Even though the price of Solana (SOL) is stable, many memes emerge
Downtime remains a sensitive topic in crypto circles, as illustrated by various memes depicting Solana's history of service outages. Cryptocurrencies may feel a little worried during the downtime period, especially those who have open perpetual swap positions.
Perpetual trading on Solana allows for added leverage by using cryptos as collateral, including stablecoins, bitcoin (BTC), and ether (ETH), as well as SOL and the memecoin BONK.
Prices, hypothetically, could drop significantly during the time it takes developers to find a solution, potentially triggering a wave of margin calls when Solana comes back online.
The market didn't seem to care much about this whole incident, so the wave never appeared. This minimal market response may reflect an understanding that Solana prioritizes “security” over “survival,” similar to Tendermint chains like Cosmos, meaning the network chooses to stop block propagation completely when consensus is disrupted.
Comparison of SOL, BTC, and Ethereum
DOn the other hand, Bitcoin and Ethereum are designed to process transactions at any cost, even if that means multiple versions of the network are operating simultaneously. Both approaches have advantages and disadvantages.
More likely, the market trusts Solana's development structure to handle these kinds of bugs. If they can restart the network five times, why not six times. This makes investors remain confident that this problem will not affect the price of Solana (SOL).
In this case, it is not so rare for popular blockchains to experience disruptions. Polygon, XRP, Avalanche, Stellar, and even Ethereum have all experienced major outages analogous to the Solana outage. This may not be the last.
Solana's latest glitch is another reminder that despite hundreds of billions of dollars flowing through it, the blockchain space is still a highly experimental financial sandbox. Sometimes, it needs a quick reboot. Have you experienced panic when Solana experienced disruption and would result in a drastic drop in the price of Solana (SOL)?
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DISCLAIMER: This article is informational in nature and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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