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Solana (SOL) Hits 4x in Open Interest, Here’s Why It Might End Ugly

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Arman Shirinyan

Solana sees massive spike in open interest, but it might become negative factor for coin

Just like the other part of the market, Solana has been actively gaining depth and liquidity, according to open interest on the market. More than a 300% increase in the total volume of open positions on the market is an extremely important signal that might not be as good as one might think, especially for Solana.

After the FTX implosion, SOL became the main target of bulls and short-term traders as more than 100 million coins were unlocked from various contracts and could have hit the market at any moment, practically driving SOL’s price to $0.

SOL Chart
Source: CoinGlass

However, for whatever reason, Solana holders decided not to rapidly sell all of their holdings but instead hold out for better times, most likely not willing to cope with losses they would have to realize. As the market recovered and assets started moving upward, SOL did not stay behind and also brought solid profit to investors.

As the trend accelerated, investors started to slowly accumulate longs, driving Solana’s open interest in new highs. At press time, almost $450 million worth of orders are open across cryptocurrency derivatives exchanges.

Why might it be bad?

The open interest itself does not necessarily mean that the asset’s price will go down; however, in the case of Solana, a large increase in the number of longs on the market could lead to a squeeze that might happen when SOL holders decide to sell their holdings to avoid risks in the future.

However, it is too early to panic as Solana has not gained enough momentum to cause the liquidation of millions of assets on the hands of investors who got burned after FTX and Alameda sold all of their Solana reserves to gain liquidity.



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Solana (SOL) Sustains Second Week of Inflows as Blockchain Sentiment Improves

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According to CoinShares data, digital asset investment products saw $117 million inflows last week, the largest since July 2022, while total assets under management (AuM) have risen to $28 billion, up 43% from their November 2022 lows.

While the focus seemed to be almost entirely on Bitcoin, which saw $116 million in inflows last week, altcoins such as Solana saw inflows as well.

Solana is sustaining its second week of inflows as sentiment around its blockchain has generally improved. Solana investment products saw inflows of $1.1 million in the past week, surpassing those of the previous week, where inflows of $0.1 million were recorded.

Solana saw a remarkable rebound after declining over 42% in the wake of the FTX implosion. Once dubbed an “Ethereum killer,” Solana was once the darling of FTX co-founder Sam Bankman-Fried.

In late December 2022, Solana’s token price steadily declined before plunging by as much as 20% on Dec. 29. Following Ethereum founder Vitalik Buterin’s support tweet, SOL’s price has more than tripled since then.

The January price bump has seen the cryptocurrency reclaim the $26 level as its price has risen. According to CoinGecko data, SOL is up 1.3% in the last seven days and 149% higher in the last 30 days. The crypto asset traded at $24.58 at press time.

SOL reclaimed the 10th spot on the list of largest cryptocurrencies by market cap before losing this spot to Polygon MATIC at press time.

Earlier in January, Citi Research published its report on Solana, saying that activity on the blockchain remained high. It also noted that a handful of key metrics had returned to pre-FTX-collapse levels, suggesting relief for some users on the chain.



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Solana-based Friktion urges users to withdraw funds as it halts front-end operations

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Solana-based DeFi platform Friktion has urged its users to withdraw their funds from the protocol, as it moves to suspend all frontend operations.

The Friktion team said it made the tough decision to suspend its operations due to the worsening financial crisis resulting from the FTX collapse and Solana’s repeated outages.

Specifically, the platform’s operating cost is said to be too expensive when compared to its profit and cash flow.

As a result, Friktion announced on Jan. 27 that it has disabled its frontend interface to prevent users from initiating new deposits.

However, the platform is in “withdrawal-only mode” to allow users to withdraw their Volt deposits.

“In the meantime, we strongly encourage users to withdraw funds as the Friktion user platform begins the process of sunsetting,” the Friktion team said.

Before the recent insolvency crisis, Friktion reached over $150 million in total-value-locked (TVL) on Solana and recorded about $3 billion in trading volume, DeFiLarma data shows.

The post Solana-based Friktion urges users to withdraw funds as it halts front-end operations appeared first on CryptoSlate.



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Solana (SOL) Migrating to New NFT Standard in Next 60 Days

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Sharky.fi, an NFT lending protocol on Solana, has shared information on the migration to a new standard of NFTs.

As stated in a thread of tweets, Solana is migrating to “programmable NFTs,” or pNFTs. This refers to a new standard of NFTs introduced by Metaplex to help creators get their royalties back.

Metaplex refers to the Solana-powered protocol that allows for the creation and minting of non-fungible tokens, auctions and visualizing NFTs in a standard way across wallets and applications.

The new asset class, “programmable NFTs,” will exist alongside “normal NFTs” and may likely become the predominant standard for royalty enforcement going forward.

The pNFT standard would allow creators to decide which protocols their NFTs are or are not allowed to interact with. This would be achieved by modifying allow-and-deny lists.

According to Sharky.fi, most of the top marketplaces, AMMs, lending protocols and staking protocols are actively working on adding support for it. It further indicated that a decent chunk of the NFT collections on Solana might migrate there in the next 30 to 60 days.

Already Solana’s crypto wallet for DeFi and NFTs, Phantom has indicated support for the Metaplex royalties enforcement standard with programmable NFTs, saying “pNFTs represent a huge step forward for the ecosystem and its creators,” while adding it was on track for a Feb. 15 release across all platforms.

Programmable NFTs now deployed on mainnet

As stated on the official Metaplex Twitter handle, programmable NFTs have now been deployed on the mainnet.

It urges developers, marketplaces and wallets to use the latest stable version of token metadata to integrate the new pNFTs’ instructions.

It further adds that creators would only be able to upgrade existing collections to pNFTs with royalties enforcement when more than 50% coverage of the new asset class has been reached across marketplaces and wallets.





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