Solana suffers from outages and tanks 16%. What’s next?


In recent days, the image of Solana (SOL) may have weakened. High levels of network congestion fueled another network outage and SOL fell hardest among the top 20 cryptocurrencies amid the market crash.

This is what happened

It was reported last week that Solana’s network was clogged, leaving many failed trades and DeFi users unable to adjust their collateral positions to accommodate the coin’s new valuation amid the crypto market’s decline.

In a Solana blog postthe team explained that the incident that validators experienced was due to excessive duplicate transactions sent by bots and “related to previously identified issues that technicians improved and fixed”.

This is not the first outage for the Solana network. The 18-hour network outage in September 2021, caused by heavy transaction traffic, remains the worst. And just this month, this was the second, after an outage on January 4.

Liquidated Solana Users

The DeFi loan protocol based on Solana, Solend, stated that the market crash caused “man”Yes accounts became liquidable and created many profitable arbitrage opportunities.”

The SOL price plummeted as the entire crypto market collapsed, so collateralized users had to increase their position in order not to liquidate their assets. Position liquidators receive a premium from liquidated positions, so when these types of scenarios arise, “race to close eligible positions” such as Laine, the blockchain firm that operates validators on Solana explained.

This is the reason behind bots, created to help liquidators win the race, but for this they “submit the same trade tens or hundreds of times”. This turns into a mass of duplicate transactions that need to be verified by validators.

There was a huge amount of attempts from Solend users trying to deposit and refund to avoid liquidations, but all they encountered was network congestion.

“This heavy load caused validators to falter, mainly because they didn’t optimally filter out duplicate transactions, wasting precious computing power. The thousands of duplicate bot transactions also drowned out legitimate user transactions.”

Solend further stated, “In addition, there was some erroneous volatility on the Pyth price feed, which caused undue liquidations (e.g., some users supplying mSOL and borrowing SOL were liquidated because prices were out of sync).”

Solend later announced that they are working to reconcile users’ issues. The platform will “refund 100% of the fine for users liquidated due to abnormal volatility on the SOL feed” and “refund 50% of the fine for other liquidations.”

SOL Price fueled

SOL is down 42% in the past week, falling dramatically from $144 on early Thursday to around $80 on Monday. It has now recovered slightly to $92.42 at the time of writing.

Consequently, SOL lost its position as the 7th largest coin to XRP and saw the deepest pool of blood in the top 20 cryptocurrencies overall, with many users wondering if their network was worth the risk.

Solana is trading at $92.28 on the daily chart | Source: SOLUSD on TradingView.com

Related literature | Solana Could Turn Ethereum To Become ‘Visa Of Crypto’, New Study By Bank Of America Shows

What’s next for SOL?

Solana released the v1.8.14 update to “mitigate the worst effects of this issue” claiming that “engineers have been working to improve and fix” the network congestion issues from the 1.8 release. More updates to implement v1.9 are expected in the next 8 to 12 weeks.

“These upcoming releases are focused on improving the health of the network, with further improvements expected to be made in the next 8-12 weeks. Many of these features are currently live on Testnet, where they are rigorously tested.”

Many users found no relief in the answers from the CEOs of Solana supporters and his co-founder Anatoly Yakovenko, calling them out for allegedly making false claims and unfair puns. The network could be an important point for its future growth. The new updates should grow with the demand and provide confidence to the disappointed users.



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