FTX’s Demise Is Crushing The Solana NFT Ecosystem

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The NFT ecosystem is suffering tremendously due to FTX’s recent collapse. The FTX insolvency has caused the cryptocurrency market to become risk-averse, and asset values for all tokens have fallen rapidly.

Numerous currencies are suffering greatly, and in just four days, the market cap as a whole fell by 23%, dropping from $1.02 trillion to $786 billion. In addition, the value of NFTs on the well-known Ethereum blockchain has decreased by 14% during the same period, according to Nansen’s NFT-500 Index.

Even worse, Solana NFTs suffered, with SolanaFloor reporting that during the recent days, the entire floor value dropped by 68%, from $424 million all the way to $135 million. Let’s have a look at more details.

An NFT logo

How is The Crypto Market Suffering?

Following reports that two of its largest investors, the crypto exchange FTX and statistical trading firm Alameda Research will go bankrupt, the native coin of the Solana blockchain is suffering greatly. There are rumors that FTX’s balance sheet has an $8 billion gap in it.

Solana Compass claims that an unprecedented number of SOL tokens are presently being unstaked. The website now states that 60,399,401 SOL tokens are classified as deactivating, which means that these would become unlocked at the beginning of the subsequent epoch. The whole supply of Solana tokens is 533,113,807 tokens.

Hence, the market may soon see a sudden influx of more than 11% of the token’s availability. When it comes to other NFTs, the Bored Ape Yacht Club dropped 43% and reached $60,000, Moonbirds dropped 51% and reached $6,800, while Crypto punks dropped 37% and reached $69,000. DeGods’ floor price decreased by 66% to $2,700 on Solana, Solana Monkey Business decreased by 68%, reaching $2,000, and y00ts decreased by 70%.

The Solana ecosystem’s principal coins are also falling drastically. For example, prominent Solana ecosystem initiatives such as Serum, Solend, Raydium, Bonfida, and Marinade Staked SOL are down by about 53%, 48%, 47%, and 60%, respectively.

FTX’s support of the Solana blockchain is partly to blame for the Solana NFT Collection’s terrible performance. The value of the Solana coin decreased by 68% down to $12 when the exchange flared. 

How Has FTX Worked With NFTs?

FTX has long been a significant NFT player. The exchange developed its own market and invested substantially in huge NFT projects. The Bored Ape Yacht Club developer, Yug Labs, has received funding from FTX Ventures. Moreover, it also took part in Doodle’s most recent Series, which saw $54 million raised. Doodle is the company behind the pastel profile image avatar.

FTX teamed with Tomorrow land and Coachella to distribute NFTs to offer unique advantages and experiences to the audience. It also partnered with well-known companies and organizations, such as the Golden State Warriors and Dolphin Entertainment.

Despite these well-known alliances, FTX’s NFT platform never managed to take off. It’s interesting to note that NFT volumes recently increased to $13 million when FTX’s liquidity was questioned. This surge might have been brought on by FTX evading the suspension of token withdrawals by buying NFTs and then removing those assets to recover revenue from the exchange.

Final Thoughts

The magnitude of the harm caused by the breakdown of FTX is still not entirely known. Until things become more apparent, investors should keep their virtual currencies, including NFTs, away from exchanges. Another risk-free phase has begun for the market, and it might be some time before confidence returns. As a result, high-risk adverse buyers might want to hold off on purchasing NFTs until the issue is fixed.