The last few days have provided a rather choppy price action for Solana (CRYPTO:SOL), to put it nicely. Solana is a leading smart contract-enabled network many investors think of as the “next Ethereum.” However, a high-profile distributed denial-of-service (DDoS) attack sometime over the past 48 hours has hit this token hard.
Solana currently trades at around $173 per token, as of noon ET, Saturday. Over the past seven days, Solana remains down 13%, and approximately 33% off its all-time high.
The pressure Solana has been under appears to be somewhat reversing over the past 24 hours, with Solana up 0.7%. That said, the overall crypto market has appreciated 2.1% over this time frame, suggesting Solana is still lagging behind its peers.
Distributed denial-of-service attacks attempt to make a network unusable. Via driving an inordinate amount of traffic to a network, wrongdoers seek to overload a network to make it unusable for end users.
Unfortunately, Solana has had previous DDoS attacks in the past, suffering a 17-hour outage in September. Investors in Solana may or may not be aware of this network’s susceptibility to attacks; however, these risks have been pointed out by some rather large institutional investors. Grayscale, for example, noted these security risks in a report issued earlier this month. In addition to high praise for Solana, as a potential disruptive blockchain network with the long-term appeal, these risks appear to be hampering investor interest in this previously red-hot token.
There is certainly a myriad of reasons to consider Solana as an excellent long-term investment. This network’s unique proof-of-history validation mechanism (similar to proof-of-stake, but much more efficient) has led to rock-bottom fees and relatively fast transaction times. This provides the Solana network with a competitive advantage many crypto investors like.
However, these attacks are worrisome. Network speed dropped during the attack, and while Solana remained online, security concerns appear to be overwhelming the otherwise bullish thesis on this network.
Perhaps these issues are simply “growing pains” as some pundits suggest. In that case, this recent dip with Solana could be a great buying opportunity. That said, like all cryptocurrencies, Solana carries risk. Investors simply appear to be more willing to account for this risk right now.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.