Brutal cryptocurrency week sees Solana suffer network instability

Solana, one of the largest blockchain networks, was hit by instability during a turbulent week for cryptocurrencies.

It’s not Solana’s first brush with instability: In September, for example, it suffered a 17-hour outage sparked by what it called “resource exhaustion.” (Bloomberg)

Solana, one of the largest blockchain networks, was hit by instability during a turbulent week for cryptocurrencies. The issue experienced by validators that use their computing power to help verify the network was caused by excessive duplicate transactions, according to a notice on the Solana website dated Jan. 22. Engineers have released version 1.8.14, which “will attempt to mitigate the worst effects of this issue,” the notice said. It added that more improvements are expected to come out in the next eight to 12 weeks, and many of those features are being “rigorously tested.” 

“Solana mainnet beta is experiencing high levels of network congestion,” the notice said. “The last 24 hours have shown these systems need to be improved to meet the demands of users, and support the more complex transactions now common on the network.”

A tweet on an unverified account that was retweeted by Solana Labs co-founder Anatoly Yakovenko attributed the network's issues to “current market volatility,” without giving further details. It's not Solana's first brush with instability: In September, for example, it suffered a 17-hour outage sparked by what it called “resource exhaustion.”

Solana's troubles came amid a broad pullback in tokens from Bitcoin and Ether to Polkadot -- and Solana itself, which has plummeted more than 30% over the past seven days, according to pricing from CoinGecko. The cryptocurrency universe has lost about $1 trillion in market value from its highs, and Bitcoin is off almost 50% from a November record. 

The smaller Avalanche blockchain has so far held up well under the recent stress, according to a tweet from Emin Gun Sirer, chief executive of Ava Labs, Avalanche's developer. “Chain performance was solid throughout,” he said. 

Memecoin Faithful Aren't Laughing Anymore as Rout Deepens

(Bloomberg) A widespread selloff in cryptocurrencies saw the most speculative tokens lose significant ground, as risk-averse attitudes pushed investors away from meme assets.

Virtual coins made popular by online hype, including Dogecoin and Shiba Inu, were among the biggest losers in weekly value on Friday as crypto majors Bitcoin and Ether slid below key support thresholds.

Dogecoin fell as much as 24% in the most recent seven-day period, tumbling more than 12% on Friday alone to a low of $0.148, according to data from CoinGecko. The meme coin is now down almost 80% from its all-time high, recorded nine months ago ahead of prominent supporter and Tesla Chief Executive Elon Musk's appearance on “Saturday Night Live.”

Other coins inspired by the shiba inu dog breed, including Shiba Inu and Dogelon, slipped around 18% in the last week. However, outlier Baby Doge rose a fifth in value over the same period.

Meanwhile, popular altcoins such as Solana, Terra's Luna, Cardano and Polkadot suffered similar hits, with some tokens falling as much as 15% in the past 24 hours.

Mike McGlone, commodity analyst for Bloomberg Intelligence, said the price pumping of meme coins such as Dogecoin and Shiba Inu last year made it more likely that speculators would continue dumping in 2022.

“The dog coins were good examples of the speculative excesses in the space and the sooner the market is cleansed of this silliness, the more likely the three Musketeers -- Bitcoin, Ether and the proliferation of crypto dollars -- will resume transmogrifying the global financial system,” he said in an email.

Meme stocks also felt the pain of crypto's whipsaw on Friday. GameStop Corp. fell 2.6%, while the Solactive Roundhill Meme Stock Index, which tracks equities such as AMC Entertainment Holdings Inc., BlackBerry Ltd. and Peloton Interactive Inc., declined 2.58%.

Crypto-related stocks were down across the board. Mining companies Riot Blockchain Inc. and Marathon Digital Holdings Inc. traded 6.6% and 6.0% lower respectively on Friday, while major Bitcoin holder MicroStrategy Inc. shed 9.4%. Core Scientific Inc. -- North America's largest Bitcoin miner, which debuted its shares a day earlier after a merger with a special purpose acquisition company -- dropped 15.34%.

The technology-heavy Nasdaq 100's entry into correction territory on Thursday posed a bad omen for Bitcoin, as a price correlation between the two hit its highest in a decade.

An environment of tightening monetary policy and stricter regulation for crypto-asset companies pushed Bitcoin to its biggest daily fall since Dec. 4 on Friday, dropping as much as 8.7%.