Anatoly Yakovenko

‘We were worried about ecosystem startups’ — Solana CEO on FTX collapse

November 3, 2023 Coin Telegraph

Solana co-founder Anatoly Yakovenko reflects on the fallout of FTX's failure and its initial impact on Solana ecosystem builders.

The now-infamous collapse of FTX sent shockwaves through the broader cryptocurrency space in 2022, but the Solana ecosystem was particularly hard hit in the fallout.

Speaking exclusively to Cointelegraph at the latest edition of the Solana Breakpoint conference hosted in Amsterdam, Solana co-founder and CEO Anatoly Yakovenko recalls his concern for several projects that were building on the layer 1 smart contract blockchain protocol.

“I was more worried about the ecosystem of startups; we didn’t know how exposed teams were,” Yakovenko explains. Solana’s native token SOL saw a significant drop in value in the immediate wake of FTX’s bankruptcy, with its token trading at $36 in early Nov. 2022 before dropping as low as $12 in the days after the exchange’s collapse.

Solana’s brains trust and several investors contacted hundreds of teams building products, services and decentralized applications to take stock of the collateral damage. According to Yakovenko, about 20% of Solana-based projects had received investments from FTX or Alameda Research and just 5% of ecosystem startups had funds sitting on the defunct exchange.

“That’s what hurt the most. Those teams saw their runway evaporate.”

Yakovenko empathized with founders who had toiled to raise capital and placed their trust in FTX as the custodian of those funds. “You keep it in an exchange that everyone seemed to trust and boom, it's gone. It was a catastrophic failure for those companies,” he added.

A prime example was Armani Ferrante, who had raised some $20 million to build out Solana-based cryptocurrency infrastructure firm Coral. The engineer has previously estimated that his company lost around $14.5 million it had held on FTX.

“Folks like Armani just really doubled down and rebuilt their companies. They took that failure and channeled it as energy to build.”

While Yakovenko concedes that seeing SOL’s value plummet due to the exposure that some prominent Solana projects had from several Sam Bankman-Fried-led investments was a tough pill to swallow, it paled in comparison to the damage done to ecosystem projects.

“It was gut-wrenching. The token price dropping sucked but that’s crypto, it moves up and down all the time. But people's runways getting evaporated, that really hurt. I’m just glad the vast majority of teams survived,” the CEO added.

The dust is beginning to settle as the one-year anniversary of the collapse of FTX approaches. Sam Bankman-Fried’s high-profile criminal trial has concluded, with the former CEO found guilty on all seven charges on Nov. 3. Sentencing is scheduled for March 2024.

Solana CEO & co-founder Anatoly Yakovenko delivers a keynote in a halloween costume at the start of Solana Breakpoint 2023 in Amsterdam. Source: Breakpoint.

There is a silver lining for the Solana ecosystem as Yakovenko explains, with several investors reaching out saying that the influence of FTX had been an impediment to supporting the new generation smart contract layer-1.

2/ @VitalikButerin recently asked me what I like about @Solana and so I'll share with the public an adapted & threaded-version of what I wrote to him
— Chris Burniske (@cburniske) December 30, 2022

Yakovenko highlighted the influence of Ethereum venture capital investor Chris Burniske in articulating the value proposition of Solana.

“He basically said now is the time to go look at Solana because this major thing that was really bad for decentralization is gone. There are legitimate people building here. His influence had a major impact on the ecosystem and getting everyone back on their feet.”

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Solana CEO hoses down claims network outages caused by on-chain voting

February 28, 2023 Coin Telegraph

Anatoly Yakovenko

Solana Labs founder and CEO Anatoly Yakovenko said claims that Solana's network outages were caused by on-chain voting were born out of "pure ignorance."

Anatoly Yakovenko, the founder and CEO of Solana Labs has downplayed claims that Solana's network outages were being caused by a high volume of validator messages and its on-chain voting system clogging its consensus layer.

While the Solana Foundation confirmed in a Feb. 27 post that the “root cause” of the recent 20-hour network outage is still not clear, the CEO responded to speculation that Solana’s decision to include on-chain votes as transactions is a “massive design flaw” that has led to its many outages.

The controversial thread in question was posted by Twitter user DBCryptoX earlier on Feb. 27 days after Solana's 20-hour network outage, suggesting that the high volume of validator messages and on-chain votes were clogging the network.

1/Yesterday #Solana had another 20 hour outage

Just one of about a dozen times the ⛓️ has gone down. But why?

All part of a massive design flaw that I will try to break down in this

So let’s get into it… pic.twitter.com/KmeUPnnlZJ
— DBCryptoX ⚡️ (@DBCrypt0) February 26, 2023

However, Yankovenko in a response Tweet some 20 minutes later called the theory as coming from “pure ignorance.”

In short, he explained that the votes — which are part of a “single giant quorum” — contribute to provide an “exceptional level of security and high throughput and low fees” simultaneously.

Why are votes transactions? Every thread that I've seen that talks about this comes form pure ignorance.

Classic BFT consensus requires quadratic messaging overhead.

The more nodes you have in the same quorum, the part of the network that agrees on the state, the more messages… https://t.co/8lOhICb8mn
— toly (@aeyakovenko) February 27, 2023

However, Yakovenko didn’t exactly refute DBCryptoX’s claim that 90-95% of transactions on Solana comprise these validator messages and on-chain votes, which, DBCryptoX suggests has helped “bog down the system.”

*DBCryptoX claims that validator messages and on-chain votes are clogging up the Solana network. Source: Twitter.*

DBCryptoX also claimed that the network outages were last 20 hours because it takes considerable time for validators to meet and reach a consensus (and thus a solution) using off-chain means, such as a messaging system like Discord.

Many commentators on DBCryptoX's initial post also appear to have disagreed with their theory.

Software engineer Alex Kroeger of Solana-powered Wallet Phantom said that there is likely no singular cause of the network outages and that validators of proof-of-stake systems need a lot of network communication to achieve validation.

While the network officially restarted on late Feb. 25, it appears as though members of the cryptocurrency community are getting tired of the frequent network outages on Solana.

Cointelegraph reached out to Solana Labs for comment but didn't receive a response by the time of publication.

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DeGods and Y00ts NFTs are bridging off Solana. Here’s why

December 27, 2022 Coin Telegraph

Anatoly Yakovenko

The migration of Solana's top two NFT projects to Polygon and Ethereum is set for the first quarter of 2023 on an opt-in basis.

Nonfungible token (NFT) firm Dust Labs is migrating its two top-performing Solana NFT projects — DeGods and y00ts — onto Ethereum and Polygon in a bid to expand their adoption.

The news was announced on DeGods and y00ts Twitter page on Dec. 25, with both NFT projects expected to be officially bridged onto Ethereum and Polygon respectively in the first quarter of 2023.

Rohun Vora — the creator of DeGods and y00ts who is known by the alias Frank III — said the decision was made to “explore new opportunities” and to allow for the continued growth of the collection. The move will also see the DUST token — used to buy, sell and mint NFTs on the DeGods ecosystem — also be bridged onto Ethereum and Polygon.

It's just the beginning. pic.twitter.com/F3vxzXQAOy
— Frank III (@frankdegods) December 25, 2022

Vora confirmed that two NFT projects will still remain on Solana for the time being, and in a separate post responding to a Twitter user, confirmed that the bridge/migration will be owner "opt-in."

During a Dec. 26 Twitter spaces, Vora explained to 66,000 listeners that it was simply a matter of getting the NFT projects on the platforms that he sees will drive the next wave of NFT adoption.

In his reasoning, he made parallels to the intense battle for intellectual property (IP) between streaming services such as Netflix, Disney Plus and HBO Max — suggesting that the streaming service that secures the best IP will ultimately win the lion’s share of viewers, which then attracts better projects.

“They’re trying to get the best IP on their streaming services because that IP is ultimately going to drive the growth on that platform.”

“Once you get enough IP on the platform it becomes a virtuous cycle, people want to be on Netflix because that’s just the brand and the place to be,” he added.

He said a similar battle is playing out between different blockchains that are trying to build the best NFT platforms, noting that as NFTs are driven by attention, there is an opportunity for “virtuous cycles” that would create a network effect for NFT projects.

From there, “the metrics, the volume and the liquidity will follow that,” he added.

Vora said his bullish view on Polygon for NFTs was influenced by the fact that Disney, Adidas, Nike and Reddit chose Polygon as their NFT platform of choice.

Vora also said that he had received grant offers from many other platforms, most of which were much larger than what was offered by Polygon, but Polygon provided y00ts with the best opportunities moving forward.

“Polygon by far was one of the lowest, if not the lowest in terms of dollar value, but we went with Polygon because we see a lot of opportunity on a strategic level and that’s what excites me and should excite you holders more than anything.”

The news has only added to the growing list of concerns for Solana, which has seen the total value locked (TVL) on the ecosystem fall 97.88% from a peak of $10.17 billion to $215M at the time of writing, according to decentralized finance data aggregator DefiLlama.

Solana co-founder Anatoly Yakovenko shared his “bittersweet” feeling on the news that the NFT projects would no longer “100% focus on Solana” to his 223,600 Twitter followers on Dec. 26, but accepted the “reality” that these projects want to expand their reach.

But controversial figure Ben “Bitboy” Armstrong and a fair share of his 1 million Twitter followers weren’t so optimistic on Solana’s future, with 70% of 11,881 voters in a poll voting “Yes” to “Is Solana dead.”

Let’s check the temperature on #solana now that the top 2 NFT projects are leaving $SOL.

Is Solana dead?
— Ben Armstrong (@Bitboy_Crypto) December 26, 2022

According to DappRadar, both the y00ts and DeGods NFT collections are ranked first and second in terms of fiat transaction volume on Solana over the last 30 days.

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