Activity on the Solana blockchain remains high even though there are an estimated 50 million solana (SOL) tokens locked in crypto exchange FTX’s Chapter 11 proceedings, Citi (C) said in a research report Thursday.
That has sharply reduced the circulating supply of the cryptocurrency and has increased 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 led by Joseph Ayoub wrote.
Citi says developers have remained active on the blockchain as new project ‘Bonk’ was airdropped to Solana holders last week. An airdrop is when free tokens are sent to wallet addresses to promote adoption of a new cryptocurrency.
Solana’s main challenge is incentivizing users and developers to stay, the note said, observing that DeGods, its largest NFT collection, recently left the chain, citing doubts about its future.
Through the end of last year, Solana 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, triggering an almost 100% rally for the token in the following weeks, with about $550 million of short liquidations over the same period, the note added.
Read more: Solana Foundation Invested in FTX, Held Millions in Sam Bankman-Fried-Linked Cryptos on Exchange