That has sharply reduced the circulating supply of the cryptocurrency and has increased the uncertainty regarding the blockchain’s future, the report said.
“However, several key metrics such as active addresses and daily non-fungible-token (NFT) volume have returned to pre-FTX-collapse levels, potentially indicating comfort from some users on the chain,” analysts from Citi Research led by Joseph Ayoub wrote.
Solana’s main challenge is incentivizing users and developers to stay, the note said, observing that DeGods, its largest NFT collection, left the chain last month, citing doubts about the network's future.
Through the end of last year, Solana's token underwent a “slow burn lower” before slumping as much as 20% on Dec. 29. The next day, Ethereum founder Vitalik Buterin expressed his support for the blockchain, causing SOL's price to almost double in the following weeks, with about $550 million of short liquidations over the same period, the note added.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.