SOL Price Dips below $94 after Solana Network Outage

Solana (SOL) suffered the first 2024 network outage in the early New York trading session on 6 February. The blackout on its mainnet network, still in beta, started at 10.22 UTC and significantly affected leveraged traders and other users.

The blockchain reported that its engineers were investigating the outage and opted for a new validator software release to address the issue that halted the cluster.

Engineers from across the ecosystem are readying a new validator software release, which includes a patch to address an issue which caused the cluster to halt. Validator operators should prepare for an upgrade and restart of the network.

— Solana Status (@SolanaStatus) February 6, 2024

At the time of writing, the network was still down amidst a call for validators to install the new software batch before restarting the network. It meant that block progression and validation on the network were temporarily halted.

For perspective, validators produce and verify transactions on a block within the network. Put differently, they confirm the fidelity of all transactions in a given block before moving to the next one. Any delay in the process means block progression can’t occur, thus grounding the network.

The Impact of Solana’s Network Outage

The network delay prompted various exchanges and services to rely on SOL to put everything on hold. Reportedly, the outage affected SOL and tokens in its broader ecosystem, such as Jupiter (JUP) and BONK. Some exchanges like CoinEx informed users of the suspension of SOL services due to network issues.

⚡️Update: Deposits and withdrawals on Solana network was suspended temporarily.
🔴If you’ve already sent SOL based tokens to #CoinEx, these transfers will be credited automatically once the official network restarts.@CoinEx_official @CoinExNigeria @coinexindia
— CoinEx Customer Support (@CoinExCS) February 6, 2024

The network instability also affected SOL price before securing stability a few minutes later. Notably, SOL’s value slipped below $94 and hit $92.88 before attempting a slight bounce after assurance of solving the network issues.

During the same period of network blackout, SOL leveraged traders, especially those with long positions, suffered massive liquidation. As per Coinglass data, $1.36 million worth of long positions were liquidated within the first hour of the network outage.

Unsolved Solana Network Issues

Despite the network outage, SOL price reclaimed $94 at press time. This was a remarkable price stability during its first 2024 outage. Such downtimes have, in the past, affected sentiment that spills over to price action. However, the re-occurrence of Solana’s network issues is quite unsettling. The blockchain network experienced several outages since its launch in March 2020. Over the last two years, it has suffered over ten major network issues, prompting core developers and engineers to restart it several times.

Solana gained prominence amidst high traction from its native token, SOL, and the promise of faster and cheaper transactions compared to Ethereum. Although touted as an “Ethereum killer”,  the frequent network outages dent Solana’s image as a serious competitor.

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2024-02-06 18:06