The carnage has been widespread in this latest selloff. Yet no major DeFi name has tumbled as much as Solana, the would-be challenger to Ethereum.
After quintupling between August and November, SOL became the fifth most valuable token in crypto with a market cap exceeding $77B. In the last seven days, Solana’s SOL has skidded 17%, the second-worst performance in the top 20 of all crypto tokens, according to data in midday trading New York time from CoinGecko.
So what gives? Why is Solana, a protocol that Sam Bankman-Fried said had the potential to become as big as Ethereum, dropping so precipitously?
That’s not an easy question to answer and it may be that investors simply believe Solana was way too frothy. But the drop does come on the heels of a tumultuous weekend when the project was criticized for reported DDoS (distributed denial of service) attacks.
“The attack exploited fundamental design flaws which are considered features by SOL,” tweeted Justin Bons, a researcher and the founder of CyberCapital, an investment firm. He said it was possible to predict and attack “the next block producers inline,” meaning its blockchain was faulty.
While Solana stayed online it has been struck before. In September, Solana said the network went down for 17 hours after a DDoS attack. No money was lost, it said.
Anatoly Yakovenko, Solana Labs’ CEO and co-founder, countered Bons on Twitter. “In summary this is straight up bs,” he tweeted. He said Bons’ technical analysis was incorrect and that Solana’s blockchain was sound.
“DDOS targeting a single leader will only delay that single leader even if the ddos perfectly marches with the poh schedule,” he tweeted. “A liveness ddos attack needs to cover 1/3+ weight of ALL the physical links in the network.”
This would put Solana in a similar category to Ethereum, whose in-progress transition to proof-of-stake would still leave the blockchain vulnerable to 51% attacks, according to ethereum.org.
Austin Federa, head of communications at Solana Labs, elaborated on this explanation. “During an initial DEX offering (IDO) a number of transactions were sent that landed in Solana blocks that took an excessive amount of compute power,” Federa told The Defiant. An IDO is a mechanism that uses a DEX, like Solana’s Raydium, to raise funds.
“The compute for those kinds of transactions wasn’t properly metered by the network, and caused the blocks to take much longer to process than the network expected.” Compute essentially means the processing power required to carry out a given task.
Building on Solana
Federa said a similar problem happened last Friday when Bons sent his tweet alleging a DDoS attack.
“The network was not down at any point,” Federa said, adding that improvements to transaction metering are live in testnet-form with those changes set for merge with Solana’s mainnet in the coming months.
Technical concerns are apparently having some impact with two Solana NFT projects postponed their mints on Dec. 13. One of the two cited DDoS attacks for the delay and the other cited unstable transactions per second.
Even so, the kerfuffle doesn’t appear to have deterred Justin Kan, the co-founder of Twitch, the social media gaming giant, from building on Solana — in Dec. 13, Kan introduced a marketplace for gaming NFTs to be built on Solana on Dec. 13.