The price of Solana is dropping following news that the network has suffered an extended downtime now stretching up to ten hours. SOL started the day around $180. However, it is currently trading at $148 as the market tries to decide the short-term (and perhaps long-term) price action for the cryptocurrency.
The price correction follows five days of bearish performance for Solana and can be directly attributed to Solana’s main net downtime, as well as buyer exhaustion.
Why is Solana Down?
On Sep 14 at 12:31 UTC, the Solana developer team reported that the project’s main network was experiencing some “instability.” The team noted that they are aware of the problem and were currently looking into it.
Given that a similar situation occurred on Sept 2, expectations were that the error would be quickly resolved. However, efforts to stabilize the network turned futile, with network validators reportedly electing to restart the network.
Was Solana hacked?
No. The downtime on the Solana network is reportedly the result of bots set up by users to claim tokens in an initial decentralized exchange offering (IDO) on Solana-based exchange, Raydium. The increase in transactions ultimately resulted in the network peaking at a 400,000 transaction per second (TPS) capacity.
1/ Solana Mainnet Beta encountered a large increase in transaction load which peaked at 400,000 TPS. These transactions flooded the transaction processing queue, and lack of prioritization of network-critical messaging caused the network to start forking.
— Solana Status (@SolanaStatus) September 14, 2021
After attempts to stabilize the network failed, validators opted to restart the blockchain to its original state before the incident. An updated version has already been released with instructions from validators on how to install it. Based on Solana’s consensus mechanism, at least 80% of validators are required to get things going.
Looks like of the validators, about 30% of a required 80% supermajority are online and waiting. This episode sucks, but truly incredible to watch the validators rally, and it’s *all for us*. Saying thanks to @ShinobiSystems @GenesysGo @CertusOne @cryptomeleabs + countless others
— ashpool (@ashpoolxbt) September 14, 2021
Solana Crash: Will Prices Recover?
Time will tell how the price of Solana reacts as the project gets its network back online. At this though, SOL is currently trading above the minor support area at around $140.
A break below that level could signal further price drops, which will not be entirely unexpected after the massive price increase from the coin in recent weeks. However, prices could recover quickly if the market shrugs off news of the network’s downtime, as it has done in the hours following the incident.