Solana was once the darling of crypto and it still may be, but skeptics are gaining credibility after the public blockchain platform saw the price of its SOL token plummet 27 percent in the last week during a broad crypto market selloff.

Six serious outages so far this month of more than eight hours could topple Solana off its pedestal, Fortune reported.

During periods of network instability when transactions fail, crypto traders are often unable to sell off their positions — “yet another sign of how unreliable this emerging technology can be during times of stress,” Fortune reported. The market-wide crash in crypto prices exacerbated the problem, leaving investors scrambling to find other routes to offload their tokens as they watched their portfolios tank.

One of the largest blockchain networks, Solana supports builders around the world in creating crypto apps. Touted by supporters for its scalability, Solana claims to be the world’s fastest such network with ultra-low fees and near-instant confirmations. However, validators who use their computing power to help verify the network have experienced outages and instability.

Solana was trading at $99.24 as of this writing, down from an all-time high of $259.96 on Nov. 6 — a 62 percent decrease in less than three months. Despite this, Solana ranks No. 7 among cryptocurrencies for market capitalization on Coinmarketcap.

Solana posted a Jan. 22 notice blaming the instability problem on network congestion and excessive duplicate transactions, and said engineers have released a new version, 1.8.14, which “will attempt to mitigate the worst effects of this issue.” More improvements are undergoing testing and are expected in the next eight to 12 weeks.

Traders on Friday and Saturday couldn’t complete transactions on Solana’s blockchain. “How can anyone possibly trust the Solana network with real capital after a meltdown like today?” said Jim Greco, a market structure guru and former executive at KCG, in a tweet on Friday.

Solana Labs co-founder Anatoly Yakovenko retweeted a tweet that attributed the network’s issues to “current market volatility,” Bloomberg reported. Yakovenko also said that bots were sending duplicate transactions, adding to the problem, The Block reported.

The cryptoverse lost about $1 trillion in market value last week from its highs. By Jan. 24, Bitcoin had lost almost half its value from its all-time high in November before recovering to its current price of $38,332.64. The world’s No. 1 cryptocurrency by market value is down 9.15 percent in the last week alone.

Solana was not the only blockchain experiencing issues as prices plunged but it is the focus of attention “because it has become a darling of large trading shops in the crypto industry and beyond,” Frank Chaparro wrote for The Block.

Having completed a $314.2 million fundraising round in June 2021, Solana can afford to fix the problem, Chaparro added.

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However, Solana’s slowdown has a ripple effect across the crypto ecosystem, affecting retail traders trying to sell Solana-based NFTs, and forcing large DeFi traders to work around the network. “Slows everything down,” one trading executive said. 

One reason that Solana has been so attractive to large trading copanies is that it has prioritized scale. But when the network gets overcrowded, it has shown that it can be unreliable 

Large traders moving tens of millions of dollars have to move activity over-the-counter and agree to settle once the Solana is working. “Agree on a price now and settle later… CEXes are still working so you still have price discovery,” an executive at a derivatives trading desk noted, according to The Block.

Other traders complained that Solana instability prevented them from adding to their position before risking liquidation.

“I don’t care about the price,” Greco told The Block. “But I can’t get anything done on the network. How many times is this going to happen at exactly the time when the network needs to perform the most?” 

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