February 19, 2025
The Explosion of FTX Is Crushing the Solana NFT Ecosystem – Forbes – Cryptosaurus

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The collapse of FTX is crushing the NFT ecosystem
In response to the FTX bankruptcy, crypto markets are in a risk-off mood, with asset prices falling sharply for all crypto tokens, fungible and nonfungible.
The total market capitalization of all cryptocurrencies fell 23% from $1.02 trillion to $786 billion within four days. Nansen’s NFT-500 index indicates that the prices of non-fungible tokens (NFTs) on the popular Ethereum price blockchain declined by 14% over the same period. Solana NFTs suffered even more losses, with Solanafloor indicating that their total min value fell 68% from $424 million to $135 million over the past few days.
Among some of the top Ethereum blue-chip collections, Bored Ape Yacht Club is down 43% to $60,000, Cryptopunks is down 37% to $69,000, and Moonbirds is down 51% to $6,800. On Solana, DeGods is down 66% to $2,700, Solana Monkey Business is down 68% to $2,000, and Y00ts is down 70% to $840.
Part of the Solana NFT collection’s poor performance is due to FTX’s advocacy of the Solana layer-one blockchain. The Solana token price dropped 68% to $12 just as the exchange was about to explode. With the decline of non-fungible tokens, which represent collections of artifact-like things that can be separated from each other, FTX’s fungible exchange token known as FTT and Serum as FTX’s Solana-based decentralized exchange (DEX) are known to have declined by 89% and 53%, respectively. in recent times.
The FTX bankruptcy saga continues to unfold, but the picture is starting to become clearer. It appears that the exchange loaned customer deposits to its affiliate, Alameda Research, a hedge fund that combined bad discretionary bets with assets. Alameda’s collapse caused FTX to go bankrupt, leaving a $10 billion hole in the balance sheet and forcing FTX to apply for bankruptcy-court protection on Friday, November 11.
FTX emerged as a major NFT player. The exchange has made strategic investments in leading NFT projects, partnered to support new issuances, and launched its own marketplace.
FTX Ventures, the $2 billion venture capital arm of FTX, has invested in notable NFT projects, including Yuga Labs, makers of the boring app Yacht Club. FTX Ventures also participated in Doodles’ recent Series A fundraising round, in which the maker of the pastel profile picture avatar raised $54 million at a valuation of $704 million.
Additionally, FTX has been active with the initial issuance of new NFT collections. FTX has partnered with music festivals Coachella and Tomorrowland to issue NFTs that provide unique benefits and experiences for concert-goers. It has also tied up with notable brands and franchises including Golden State Warriors, Washington Wizards & Capitals, Dolphin Entertainment and Mercedes F1 to endorse its collection.
Despite these high-profile partnerships, FTX’s NFT platform never gained popularity. Interestingly, since the solvency of FTX has been called into question, NFT volume has increased to $13 million in recent days. It is possible that this increase was due to users bypassing FTX’s suspension of alternate token withdrawals by purchasing NFTs and then withdrawing those assets as a way to recapture value from the exchange.
FTX – International off-shore crypto exchange with its US branch, FTX.US. FTX is one of the largest global exchanges by trading volume, serving institutional and retail clients
Alameda Research – Hedge fund that conducted trading and market making activity on the FTX exchange
Sam Bankman-Fried (SBF) – Founder and former CEO of FTX and Alameda Research
“FTX’s reputation as an industry leader is critical to the perception of cryptocurrencies among retail users and investors. The FTX collapse affected the average consumer less involved in the crypto industry than any other collapse, as FTX was globally well-known and trusted. The NFT industry will see an increase in fear and skepticism among mainstream users in the short term.
The NFT and crypto industry must again gain the trust of the world, which while challenging, will be done through the continued development of NFTs with real-world utility that can solve problems. Given the growing fear of perceived financial risk entering the cryptocurrency and NFT space, solutions that provide a source of revenue for creators and companies will be especially beneficial to lead the industry through this crisis.

Magic Eden, OpenSea and Solanart, a Solana-based marketplace called Solana Cryptocurrency, have seen significant growth in NFT trading volume, more than tripling from about 80,000 a week ago to more than 250,000 Solanas traded. As NFT prices declined, this increase in volume suggests that holders were rushing to get out and sell their NFTs due to the FTX event.
Increase in Solana based NFT trading volume
The outcome could fundamentally change the value proposition for Solana and related projects, especially now that its biggest supporters can no longer support the ecosystem.
FTX and Alameda Research have been intrinsically linked to the Solana blockchain since the protocol’s launch in 2020. They have been instrumental in helping Solana gain traction and visibility. Solana Token is also Almeida’s second largest holding, representing roughly 10% of the crypto’s market cap.
The brief threat of an acquisition by Binance this week has sparked fears among Solana investors that Binance CEO Changpeng Zhao may sell assets to support its competing blockchain token, BNB, which could lead to a selloff in Solana. Ultimately, CZ, as it is known, called off the potential acquisition, but Solana still appears to be troubled by its association with FTX and Alameda.
As the selloff shows, some investors have lost faith in Solana. This could prevent founders and creators from building new applications and NFT collections on Solana, potentially stunting the growth of the Solana ecosystem.
We do not yet know the full extent of the damage caused by the FTX explosion and the extent of the contamination. Investors are encouraged to keep their digital assets, including NFTs, off exchanges and other centralized platforms until the dust settles.
The market has entered another risk-free period, and it may take time for confidence to return. NFTs are a riskier high beta play on the rest of the crypto market, meaning they have higher up and down returns than major crypto assets like bitcoin and ether. Thus, investors who are highly risk averse may want to hold off on buying NFTs till the situation corrects.
Investors looking to bet on the long term can choose to support other major layer-one protocols and their growing NFT ecosystems, such as Ethereum, Binance Smart Chain, Polkadot, and Avalanche. Due to the uncertainty over Solana and Solana-based projects, these options may outperform.

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Source: cryptosaurus.tech

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