Several exchanges have halted withdrawals of the Solana cryptocurrency after a software problem caused developers to halt its network for several hours yesterday.
Binance, Coinbase, FTX and Crypto.com reported (or were reported by clients) as having disabled all movements of the Solana token.
“Due to network conditions, sends/receives are currently disabled for SOL. Your funds are safe on Coinbase,” the exchange said on June 1 at 17.17 UTC.
“We’ve identified the cause of the issue, and we’re fixing it right now. We’ll post additional updates as soon as possible,” Coinbase said at 02.37 UTC on 2 June.
“Sent Solana to Coinbase and balance is showing zero,” one user reported on Twitter three hours later.
The freeze on cryptocurrency movements came after Solana’s network was halted for several hours yesterday.
According to Coindesk, the network outage occurred after developers reacted to a software bug that caused Solana to stop ordering transactions correctly.
“Sent Solana to Coinbase and balance is showing zero”
Solana’s token was listed on major exchanges in June 2021 after the cryptocurrency project raised $312m from a group of investors, including venture capital firm Andreessen Horowitz, Polychain Capital, Alameda Research and CoinShares.
At the time, Sam Bankman-Fried, chief executive of the FTX exchange (and then of Alameda as well), said he was planning to build decentralised finance (DeFi) applications on Solana rather than on the ethereum network because of Solana’s greater transaction capacity.
“Any products that we tried to build or that even that we tried to scope out—we originally were just definitely going to build on ethereum because that’s where everything was—product after product got into the same death knell which was 10 transactions a second for the network was just not enough,” Bankman-Fried told the Block in May 2021.
By comparison with bitcoin and ethereum, Solana uses a different consensus mechanism, called ‘proof-of-stake’, to process transactions: the Solana blockchain relies on a group of over a thousand ‘validators’ for this purpose.
On its website, Solana promises close-to-instantaneous (0.4 second) settlement and fees of around two hundredths of a US cent per transaction.
In January, a Bank of America analyst said Solana could soon rival the Visa network as a result of its high speed, low cost and scalability.
By November 2021, Solana’s token price had surged by more than 17,500 per cent, making it the fourth largest cryptocurrency by market capitalisation.
Now, however, Solana’s token has fallen by 85 percent from its November peak.
Despite hopes that it could work as an ‘ethereum killer’ and provide a backbone for DeFi, Solana’s network has suffered repeated outages. In May, it froze for seven hours before restarting.
In February this year, Solana was at the centre of a $320m bailout, financed by trading firm Jump Crypto.
The bailout came after a hack of a ‘bridging protocol’ called Wormhole, in which Jump had invested. The bridging protocol was meant to enable the transfer of value between Solana and other cryptocurrency networks.
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