CRYPTO MOVERS AND PRICES
ETH was outperforming in the Top 10 while BTC remained unchanged. Ethereum-based DeFi tokens were also higher this morning, with SUSHI up 25%.
Crypto Story of the Day
On Tuesday, the Solana network experienced an outage that lasted roughly 17 hours. The event highlights the experimental nature of most blockchain technology.
Yesterday, “Solana Status,” a Twitter account controlled by Solana’s developers, notified users that the network “encountered a large increase in transaction load which peaked at 400,000 TPS. These transactions flooded the transaction processing queue, and lack of prioritization of network-critical messaging caused the network to start forking.” The “forking” led to “excessive memory consumption” which caused some nodes to go offline.
According to Solana Status, “[e]ngineers across the ecosystem attempted to stabilize the network, but were unsuccessful.”
Ultimately, Solana was brought back online after key actors on the network decided to implement a “restart” of the network. According to Solana Status, following the restart, “[decentralized applications], block explorers, and supporting systems will recover over the next several hours, at which point full functionality should be restored.”
It isn’t clear if “full functionality” has been restored to the network at this time, however, websites offering open source data related to Solana show that transactions are being processed.
The Solana project has promised that a full post-mortem will be published in the coming weeks. According to Anatoly Yakovenko, CEO of Solana Labs, the increased transactions were being sent to a DeFi venue on the network, Raydium, which was about to begin the sale of a new token. Yakovenko also claimed that Solana engineers had been preparing a fix for the possible issue before it took place.
Solana’s native SOL token has seen its market cap lose about USD 4 billion since the episode.
Tuesday also saw Ethereum layer 2 solution Aribtrum experience a 45 minute outage due to the network being overwhelmed with transactions. The project’s development team Offchain Labs said that during the outage funds were never at risk, and that “further outages are possible in these early days” of its beta phase. The team raised USD 120 million in a Series B funding round at the end of last month.
Historically, some blockchain networks have frequently encountered critical technical issues. For example, in August, the Ethereum network suffered a chain split due to a bug in software used to interact with the network. ETH saw new intraday highs following the event. Similarly, since Solana encountered the issues, investors seem willing to overlook the technical red flags, despite their duration and severity.
Ultimately, blockchain applications are tested in practice as testnets are unable to simulate the full range of possible scenarios under which the tech is expected to perform. As such, events such as Solana’s outage will likely continue to be a feature of blockchains and their applications.