Hackers Just Stole $8M From Solana Wallets – Is It Time To Sell This Cryptocurrency?

Since its launch in 2020, Solarium (SUN 0.61%) has skyrocketed in popularity by positioning itself as a faster and less expensive alternative to Ethereal. Today, Solana ranks as the 9th most valuable cryptocurrency, with a market capitalization of $13.5 billion.

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

Is it time to sell this cryptocurrency?

The details of the attack

The attack began on Tuesday, when investors took to social media to report unusual transfer activity involving 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 off millions of dollars worth of Solana, Solana-based tokens, and USD Currency.

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

In short, the blame seems to lie entirely with Slope, and the Solana Foundation has pointed out that there is no evidence that Solana herself was compromised.

Is it time to sell?

Solana is undoubtedly a risky investment, but the latest attack on Solana wallets should not 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 simple: the number of active developers on the platform increased 385% last year, growing faster than any other blockchain except ghost. 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 financial services (DeFi).

For example, 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, with nearly $2 billion in blockchain investments.

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

In that vein, earlier this year, Solana introduced Solana Pay, a service that allows 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. Most recently, Solana introduced Saga, an Android mobile phone tightly integrated with the Solana blockchain, allowing users to easily interact with dApps and DeFi services on the platform.

If Solana-based dApps and DeFi services continue to gain momentum among consumers and investors, demand for the underlying SOL coin should increase, driving its price higher. For investors with conviction in that narrative, now is not the time to sell Solana.

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

Leave a Comment