Solana’s SOL Surges After Blockchain’s Foundation Delays Plan to Unstake Tokens

A record 31 million of the Solana blockhain’s SOL tokens were unstaked Thursday from the blockchain’s security mechanism, a day after crypto analysts warned that some investors might be seeking to redeem their holdings as the price of the digital assets tanked.

But the price of SOL surged in digital-asset markets after the Solana Foundation, which supports development on the blockchain, said it would postpone a plan to unstake some 28.5 million tokens.

A total of 63 million SOL was previously ready to be unstaked at the conclusion of the Solana blockchain’s “epoch 370” staking lock-up period, according to a statement from the Solana Foundation on Thursday.

The foundation had tweeted late Wednesday that about 28.5 million SOL tokens scheduled to be unstaked had been re-staked due to a policy change of cloud service provider Hetzner on Nov. 2.

Those tokens are owned by the Solana Foundation’s treasury and had been staked as part of a delegation program, according to the tweet.

“While 28.5M SOL was in the process of being unstaked during this epoch, the plan to unstake has now been postponed, and all 28.5M SOL have now been re-staked,” according to the tweet thread.

The FTX connection

The SOL price’s fall this week appeared to be tied to speculation surrounding this week’s drama involving the rapid deterioration of the erstwhile billionaire Sam Bankman-Fried’s crypto empire, including the FTX exchange and Alameda Research trading firm.

Riyad Carey, research analyst at crypto data firm Kaiko, told CoinDesk Monday that SOL is Alameda’s second-largest holding, and it also holds significant amounts of SOL ecosystem tokens like MAPS and OXY.

The speculation was that Alameda might need to dump its SOL tokens to raise liquidity.

SOL’s price recently rose 18% to around $17 after plunging as low as $12 in the past 24 hours. (Crypto markets were broadly higher; the CoinDesk Market Index jumped 11%.)

Solana didn’t specify the exact change of the data center provider that caused the restaking action, after a request for comment from CoinDesk. Hetzner didn’t immediately return for comment as of press time.

A new Solana staking epoch

An “epoch” on the Solana blockchain refers to the time period when staking rewards are earned and then issued. Validators will lock in their stake on the blockchain during this period, which takes about two days, and can choose to unlock the tokens once the epoch is over.

The new epoch period, known as 371, started Thursday morning, with currently around 660,000 SOL tokens, worth more than $11 million, already scheduled to unstake after the lock-in period ends, according to Solana Compass.

Eliézer Ndinga, director of research at crypto investment products firm 21.co, said that some operational indicators of the Solana blockchain, such as user adoption, still look healthy.

The number of applications built on top and the retention rate of the developers is also “a testament” to the ecosystem’s overall health, Ndinga said.

“I believe that there is nothing that is structurally damaging for the Solana adoption itself,” he told CoinDesk. “Solana should come up stronger as long as, of course, they remain.”

Source