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Network Disruptions Hit Solana Again, Sinking This Top Crypto 9% Today – The Motley Fool

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Today, top 5 cryptocurrency Solana (SOL -1.45%) has been crushed by the weight of the market. As of 11 a.m. ET, it saw declines of 9.4%, losing approximately $4.5 billion in market capitalization today alone. 
This move came a day after Solana reported “degraded performance due to an increase in high compute transactions, which is reducing network capacity to several thousand transactions per second” and that led to some failed transactions.
The fourth such incident in the span of a few months, this is the second in the past week. Some investors appear to be growing concerned about the integrity and longer-term network performance of Solana, given these hiccups.
Image source: Getty Images.
To put this degraded performance into perspective, Solana has a stated network capacity of 50,000 transactions per second. A slowing to a “few thousand transactions per second” is material, though this network is still orders of magnitude faster than other smart contract-enabled blockchains such as Ethereum, which can currently only process around 13 transactions per second.
The Solana team has revealed that a large number of transactions fell onto the Solana blockchain following a decentralized exchange offering. These transactions took a tremendous amount of computing power, effectively slowing the network and causing some transactions to fail. While these scenarios are rare, the Solana team calls them growing pains and nothing for investors to be concerned about.
To be sure, Solana’s impressive growth over the past year certainly should allow for some patience among investors. This is a relatively young blockchain that’s grown incredibly large, incredibly fast. Accordingly, there are many out there who believe the slowing of the Solana network is a good thing. That’s because this could reflect the skyrocketing usage of the network, a bullish factor over the longer term.
However, there are others that remain skeptical about the security of the Solana network. Previous reports of distributed denial-of-service attacks on the network, while still disputed, have some staying on the sidelines with respect to investing in Solana. 
Right now, it seems more likely that the Solana network is simply adapting to extremely high volumes during peak periods. While security-related risks are real with every blockchain network, I’m inclined to believe the story the Solana team has put out. Unfortunately, many investors appear to be taking a different view today.

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An Open Source activist, who pursues his passion for tech blogging. In early years of his life, he worked as market analyst for a number of companies. Martin has been writing reviews and articles for a local magazine for last five years.