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Bitcoin

FTX Contagion Is Spreading To the Solana Ecosystem (axios.com) 63

Posted by BeauHD from the something-to-watch-out-for dept.
Solana's SOL is down much further than any of the other major cryptocurrencies today, all of which are down badly following the sudden unraveling of the wildly fast growing crypto exchange FTX on Tuesday. Axios reports: Blockchain principles aim to instantiate the ideals of decentralization. That is, no single points of failure. Blockchain realities, though, show that each community tends to have its major leaders. For Solana, one of those was definitely FTX's c0-founder, Sam Bankman-Fried (SBF). SBF has long been bullish on Solana, including working to build Serum, an order book style exchange that runs in a decentralized fashion. His firms are rumored to have owned a substantial amount of the total SOL supply.

FTX and Alameda Trading are in trouble. If they hold large amounts of SOL, they are very likely to exit those positions, which will tank SOL price. CoinDesk reported on Nov. 2 that Alameda had $292 million in SOL and $863 million in locked SOL (on the Solana blockchain, large holders can earn more by backing the blockchain's validators by committing not to sell -- or locking -- for a certain period of time). "People are dumping already -- self-fulfilling prophecy," Economics Design's Lisa Jy Tan told Axios over Twitter DM. Tomorrow, the entities verifying the Solana blockchain have already publicly indicated their intention to unlock about a billion dollars worth of SOL (at current prices), about 17% of its market cap. It's reasonable to expect they might intend to sell.

Solana's fall has put stress on one of its leading decentralized finance applications, Solend, a money market that works much like Ethereum's Compound. Solend is gradually unwinding a single, almost $30 million USDC (stablecoin) loan, collateralized by SOL, which is falling fast while the protocol tries to sell. Much like SOL's price, the total value locked (TVL) in various DeFi projects on Solana has fallen much further in the last day than on other smart contract blockchains, according to DefiLlama. Solana TVL is down 45% over the last day, to $470 million, as of Wednesday afternoon, New York time.
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FTX Contagion Is Spreading To the Solana Ecosystem More

FTX Contagion Is Spreading To the Solana Ecosystem

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  • "decentralized" (Score:5, Insightful)

    by Burdell ( 228580 ) on Wednesday November 09, 2022 @09:15PM (#63039939)

    You keep using that word. I do not think it means what you think it means.

    • Re:"decentralized" (Score:5, Funny)

      by Tablizer ( 95088 ) on Wednesday November 09, 2022 @09:33PM (#63039987) Journal

      It means you get fucked from multiple simultaneous directions without warning.

    • Re: "decentralized" (Score:4, Interesting)

      by klipclop ( 6724090 ) on Wednesday November 09, 2022 @09:36PM (#63039989)
      I think the protocol is decentralized. Seems like the bagholders had a centralized hold over the float of the coins though. LOL

    • Re:"decentralized" (Score:5, Insightful)

      by coop247 ( 974899 ) on Wednesday November 09, 2022 @10:47PM (#63040095)
      In Crypto decentralized only means "good luck trying to sue us"

      We are exactly one year out from the crypto peak. Go to Coinbase and click on any coin or token, do the "1 year" chart, and ever single one is down between 75-98%. EVERY ONE. In one year.

      • Re:"decentralized" (Score:5, Funny)

        by careysub ( 976506 ) on Wednesday November 09, 2022 @11:14PM (#63040131)

        Go to Coinbase and click on any coin or token, do the "1 year" chart, and ever single one is down between 75-98%. EVERY ONE. In one year.

        But... but HODL! Buy on the dip! Store of value! Fiat currency!

        How can so many slogans be just B S?

        • Fake it till you make it! That is crypto in many ways. Also the mortgage backed security collapse as well. A ring of self dealing: Bank A keeps your money safe by investing in Bank B, who invests in Bank C, who invests in us. One stumble and everyone in the ring around the rosie falls down. Now FTX invests in a company that is essentially itself, it's just a smaller ring around the rosie than normal. All these other crypto brosers invest in FTX because it looks stableish, and they stumble too. Eventu

      • Re: (Score:1)

        by Tablizer ( 95088 )

        But I hired microservice edge-cloud quantum lawyers.

    • You keep using that word. I do not think it means what you think it means.

      It's far better to have it be "deregulated" rather than "decentralized".

      DeFi == deregulated finance

      It's also more honest.

  • Old saying on Wall Street (Score:5, Insightful)

    by istartedi ( 132515 ) on Wednesday November 09, 2022 @09:17PM (#63039943) Journal

    Nobody knows who's naked until the tide goes out.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      FTX took a huge bet and lost; ergo FTX had a management issue. FTX is only naked because FTX decided to bet its clothes on nothing of intrinsic value. Business 101 says don't do that.

      • Re:Old saying on Wall Street (Score:5, Insightful)

        by careysub ( 976506 ) on Wednesday November 09, 2022 @11:26PM (#63040149)

        FTX took a huge bet and lost; ergo FTX had a management issue. FTX is only naked because FTX decided to bet its clothes on nothing of intrinsic value. Business 101 says don't do that.

        No, this little debacle is not FTX's main problem. The start of this melt-down was this report on 2 November [coindesk.com] which revealed that most of FTX's "assets" were just tokens created by SBF'sother company Alameda. Such self-dealing would make the CEO of Enron blush.

        That this was financial fraud skated as long as it did was because "unregulated".

        FTX is only naked because it was a massive scam run by its creator/owner.

        These guys always seem to think the fraud can run forever.

        • It wasn't fraud.

          It was "alternative finance".

          Because "this time it'll be different! Everything has changed! The rules no longer apply!"

          Tulips.

        • Re: (Score:2)

          by sjames ( 1099 )

          Funny, they make funny virtual coins and collect a fortune. If I print a physical object, the secret service calls it 'counterfeiting' and they lock me up.

        • These guys always seem to think the fraud can run forever.

          Either that, or they overestimate how long it will take for people to catch on and hang on to it too long.

    • Re: (Score:3)

      by Tailhook ( 98486 )

      Nobody knows who's naked until the tide goes out.

      Nobody knows who's naked on Wall Street because bad bets frequently get covered by tax payers. Or at least federal debt and money printing. The naked ones are whomever doesn't have the pull to get saved by politicians.

      • Or at least federal debt and money printing.

        Crypto gets bailed out by scamming, personal debt, and printing more cryptocurrencies.

    • Every god damn one of them are nude as jaybirds.

    • The expression is 'for all intents and purposes'.

    • My naked shorts will cover my shame!

  • Okay, spank me with an out-of-touch geezer noodle, but I cannot figure out the difference between a "contagion" and a virus or worm.

    • I imagine they're talking about the contagion of panic sell-offs.

      I'm probably retardedly wrong on this, but then again, I don't give a fuck about anything crypto.

    • definition (Score:2, Interesting)

      by Anonymous Coward
      Contagion means a whole lot of greedy stupid people were all doing the same thing, and when one of them gets taken out the rest get taken out soon after. Crypto had effectively no regulation whatsoever so naturally people were 100x as greedy and stupid as normal finance bros.
    • I think in crypto's case, contagion is the main market mechanism, i.e. people value it highly because some other people do too because feelings & post-hoc rationalisations. What developmental psychologist, Lev Vygotsky, back in the early C20th called, "...only affect and contagion." Didn't Kahnemann & Tversky win the Nobel prize for economics for pointing this out?
  • To soiled!

  • Seriously, who picks "SOL" as a name for anything you want people to have confidence in?

    • Re: (Score:2, Informative)

      by Anonymous Coward

      I think SOL is just a victim here, it is FTX that is FUBAR

  • PUD come back! (Score:4, Funny)

    by sdinfoserv ( 1793266 ) on Wednesday November 09, 2022 @10:00PM (#63040025)
    Maybe it's time for Pud to dust off FuckedCompany....

  • shut up about ftx (Score:1)

    by Anonymous Coward
    shut up about ftx. shut up about ftx! NO ONE CARES ABOUT CRYPTOCURRENCY.

  • Correction... (Score:4, Funny)

    by thragnet ( 5502618 ) on Wednesday November 09, 2022 @10:58PM (#63040111)

    "Ecosystem" should read: "RICOsystem"

  • I have to admit. This past year I was thinking crypto would die a slow lingering death. It appears it may be more of a popcorn event shaping up. I have been sorry to see how some fairly large retirement funds seemed to have bet on crypto. I think the Toronto Teachers Retirement lost money. Sad, people completely orthogonal to the money managers will pay the price. I would have thought the "pro's" would have known better.

    • Yeah, I'm not sure why, but my guess is that a couple of events may have sped it up.

      One is the insane inflation caused by the Russo-Ukranian war. Precisely one of the use cases that cryptocurrency claimed, and they are nowhere to be seen.

      The other is the slow implosion of social media giants; FB with the Metaverse and Twitter with whatever the hell Elon Musk thinks he's doing. Again this was a claimed use case for Web3, and again they are nowhere to be seen.

      People seem to be realising that blockchain is use

    • This shows how little many of the fund managers know what they are doing. No one can predict the future and surely pro's also can't. The more convincing they sound the louder your bullshit alarm should go off.

  • All those dominoes are falling like a house of cards. Checkmate.

  • For disabling content which only concerns the lowest life forms?

    Maybe just blocking Beauhd?

  • I've never understood why it should be. Its just people speculating that there are greater fools who will take this useless stuff off their hands at a better price. Its completely useless, there is no reason to want to hold any other than that you expect other people to pay more for it. You can't do anything with it other than sell it.

    I would expect it to eventually fall to zero and be a chapter in a new edition of Great Popular Delusions and the Madness of Crowds, or its latter day equivalent.

    Or maybe

    • It was useful for paying for illegal things, avoiding taxes, and money laundering. What a shock that the system eventually fails due to thieves, greed, and incompetence.

    • It's only worth something if people think it's worth something and are willing to pay for it. It has no intrinsic value -- it can't be eaten, it can't be used to build or manufacture anything, it can't be burned for heat, etc. (The energy wasted in mining doesn't count lol.)

      With all of the marketing hype, fools were convinced it was worth something for a while and were willing to pay for it, but now more and more people are waking up to realize the truth, and the actual value is correcting back to where i

  • Google translate claims it's already English, but I am not sure.

  • Possibly great opportunity to make money (Score:3)

    by DeplorableCodeMonkey ( 4828467 ) on Thursday November 10, 2022 @08:55AM (#63040691)

    If it crashes hard like Luna did, throw some lottery money at it. If it hits $0.20, there's a good chance that morons on Twitter and Reddit will start buying the dip a la Luna Classic. That's how /biz shitposters turned hundreds of dollars into tens of thousands. They knew the morons wouldn't stay away.

    Not financial advice, but if LC is any indication of what idiots with money can do, buying the crash (the crash, not dip!) could potentially turn $100 into $5k-$10k.

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