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Hackers Just Stole $8 Million From Solana Wallets — Is It Time to Sell This Cryptocurrency?

Since its launch in 2020, Solana (SOL 0.61%) has skyrocketed in popularity by positioning itself as a faster, less expensive alternative to Ethereum. Today, Solana ranks as the ninth most valuable cryptocurrency, with a market cap of $13.5 billion.

However, the Solana blockchain has experienced a number of performance problems in recent months, including two major outages since May. And earlier this week, Solana enthusiasts were hit with more bad news. A hacker (or group of hackers) managed to steal more than $8 million from roughly 8,000 Solana wallets.

Is it time to sell this cryptocurrency?

The details of the attack 

The attack started on Tuesday, when investors took to social media to report unusual transfer activity with three Solana wallets — Phantom, Slope, and TrustWallet. As the attack rolled into Wednesday, the truth and scope of the attack began to take shape. Thousands of crypto wallets had been compromised, and someone was siphoning away millions of dollars in Solana, Solana-based tokens, and USD Coin.

After an investigation, the Solana Foundation said the affected addresses were at one point created, imported, or used in Slope mobile wallet applications. Private key information was inadvertently leaked from Slope to an application monitoring service, though the exact cause of the leak is still unknown. Regardless, a private key allows the holder to authorize crypto transactions from the associated wallet. Once the hacker had that information, stealing the funds was easy.

In short, the blame appears to lie entirely with Slope, and the Solana Foundation has noted there is no evidence that Solana itself was compromised.

Is it time to sell?

Solana is undoubtedly a risky investment, but the latest attack on Solana wallets shouldn’t sway investors one way or the other. It had nothing to do with the blockchain protocol or the cryptography that keeps it secure. The real question is whether Solana is backed by a compelling investment thesis.

The bull case is straightforward: The number of active developers on the platform surged 385% last year, growing more quickly than any other blockchain except Fantom. Better yet, Solana ranks fourth in terms of total developers, and that popularity has transformed the platform into a thriving ecosystem of decentralized applications (dApps) and decentralized finance (DeFi) services.

For instance, Solana-based Magic Eden currently ranks as the second most popular NFT marketplace by total users in the last 30 days. And Solana itself is the fifth-largest DeFi ecosystem in the crypto industry, boasting nearly $2 billion in investments on the blockchain.

Three things are driving that adoption: fast transactions, low transaction fees, and an innovative internal developer team.

On that note, earlier this year, Solana introduced Solana Pay, a service that enables consumers to transact directly with merchants using stablecoins like USD Coin. Solana Pay is significantly faster and cheaper than traditional card networks, which means it could disrupt the financial industry in a big way. More recently, Solana introduced Saga, an Android mobile phone tightly integrated with the Solana blockchain, empowering users to engage easily with dApps and DeFi services on the platform.

If Solana-based dApps and DeFi services continue to gain momentum with consumers and investors, demand for the underlying SOL coin should rise, pushing its price higher. For investors with conviction in that narrative, now is no time to sell Solana.

Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ethereum and Solana. The Motley Fool has a disclosure policy.




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