We do the research, you get the alpha!
After last week’s aggressive regulatory action from the U.S. Securities and Exchange Commission (SEC), which labeled Solana’s SOL token a security in a lawsuit, the community on Crypto Twitter erupted in a debate surrounding a possible hard fork.
The debate, although it's been heated at times on Twitter, appears to not have reached Solana developers.
“I work on the largest Solana project, with more than 10 developers, and nobody is discussing [a hard fork]” said Matías Kudelski, a cyber security researcher who audits Solana’s code and works on metaverse game Star Atlas.
He spoke to Decrypt about the controversy on Monday and added that neither the Solana Foundation nor users in the protocol's Discord server had bothered weighing in on the possibility of a hard fork.
The pseudonymous SOL whale known as "HGE," a shareholder of NFT platforms Magic Eden, Tensor, and Exchange.Art, and a contributor to Hadeswap, an NFT automated market maker (AMM), spoke to Decrypt about the possibility of a hard fork.
“I don’t think developers/foundation considered hard fork” he said, adding that it is “just an idea among the community.”
HGE is not sold on the idea, and thinks it is controversial—especially if were motivated by people wanted to remove Alameda Research’s locked tokens.
According to Delphi Digital, the Sam Bankman-Fried founded trading desk has a locked stake of 8.2% of SOL’s total supply. It's not a number to scoff at. Due to the company's ongoing bankruptcy proceedings, the tokens would likely be liquidated as soon as they unlock in 2025.
He did say, however, that a fork would make the protocol “more decentralized.”
But there are still plenty of people in favor of a hard fork within the SOL community, and their arguments stem from two main concerns. Perhaps the biggest concern is that last week’s regulatory clampdown from the SEC left Solana in uncharted waters.
This means it could find itself in the midst of a prolonged court battles, although the Solana Foundation itself hasn't been charged. But because the SEC mentioned that it considers SOL a security, it's already been delisted from Robinhood. The publicly traded US-based company, which is listed on the Nasdaq under the HOOD ticker, reported 12 million monthly active users in its latest quarterly report.
There's now also a chance that SOL could be delisted from the exchanges currently facing charges: Coinbase and Binance. Those two exchanges alone accounted for $69 million, or 30%, worth of SOL's total $232 million volume over the past 24 hours.
A second concern is the murky ties between Solana and now-defunct crypto exchange FTX, which HGE alluded to.
The Solana Foundation did not respond to a request for comment from Decrypt.
Co-founder of degenpicksxyz, Caps (formerly known as NinetiesNFT), kicked off the discussion on Saturday when he tweeted: “It’s time to fork SOL. SEC disappears, FTX bankruptcy can dump on themselves” he said, ending with “BTC and ETH both did it.” Caps then included a poll asking for the community’s thoughts. 2,050 votes later, nearly 40% were on board with his ideas.
Crypto enthusiast DSentralized echoed his concerns, sharing a thread with his ideas regarding the hard fork and current situation with Coinbase, Alameda, and the future of the chain.
“It would be counterproductive to Coinbase’s fight against the SEC to delist SOL,” he said, and stands currently in favor of a hard fork, primarily due to Alameda’s stake in the protocol. DSentralized added that “We, as the Solana community, need to reach consensus if we should fork Alameda’s $sol (~8% of supply afaik),” he tweeted, adding that those coins will “harm Solana’s future as long as they exist.”
Not everyone is in favor, however. SOL Big Brain, the founder of Solana NFT rarity platform HowRareIs and venture capital firm Big Brain Holdings, thinks it’s “nonsense” and that people should “put their energy to better use.”
Bardy, a member of the Aurory DAO council, is also not convinced, tweeting: “It’s hard to take a Solana fork seriously if we do it to remove balances from certain accounts i.e. FTX’s 8.2% holdings.” He explained that it would create a situation where “nothing” could stop people from forking again were a balance to get too high.
Unfortunately for the discussion and eventual fate of the protocol, Solana co-founder, Anatoly Yakovenko, announced on Twitter that he would be disconnected for the next four to six weeks, which could help explain why the typically active tweeter has yet to weigh in.
Bardy ended with a foreboding thought: “Forking without Toly feels like shooting oneself in the foot anyway.”