- FTX possesses $1.162 billion in SOL tokens, with 67% bound in a lockup agreement until 2025.
- Recent Solana price dips arise from misplaced concerns about FTX’s potential liquidation of their SOL holdings.
Understanding the FTX-Solana Saga
The cryptocurrency space was rife with anxiety over the past weekend. Solana (SOL) witnessed a significant decline, with its price dropping below the $18.50 mark. The primary cause for concern amongst investors was the upcoming FTX hearing at the Delaware Bankruptcy Court on September 13. Speculation was rampant that this could lead to the crypto giant offloading a vast amount of their Solana assets.
FTX, a leading crypto exchange, has a substantial portfolio in various cryptocurrencies, with Solana being a significant portion of its asset reserve. As of January 17, FTX’s cryptocurrency cache was believed to comprise around $685 million in SOL, $529 million in FTT tokens, $268 million in Bitcoin (BTC), $90 million in Ethereum (ETH), and an assortment of other assets. It’s worth noting that FTX previously liquidated a sizable amount of SOL during an exchange crash in November 2022.
FTX sits on a whopping $1.162 billion worth of SOL tokens. But wait, here's the twist: https://t.co/JnOV6DBDbF reports that over 42.16 million SOLs (67% of that stash) belong to Alameda and they're LOCKED until 2025! 📆 No quick, massive dumping in sight! 💎🚫 #SOL #FTX #Solana pic.twitter.com/OLAvqgiMB6
— Collin Brown (@CollinBrownXRP) September 13, 2023
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Locked Tokens and Liquidation Myths
Here’s where the details matter. Contrary to widespread apprehensions, a vast portion of the SOL tokens held by FTX isn’t immediately available for trading. This is due to a lockup agreement that FTX entered into when they, alongside Alameda, secured 16% of the SOL supply directly from the Solana Foundation.
This agreement came with specific stipulations, primarily a defined lockup timeframe. The present holding of 47.51 million SOL, accounting for 8.82% of Solana’s eventual complete supply, is governed by this lockup condition.
So, the widespread notion that this large SOL reserve is on the brink of a market sell-off is a misconception. The truth lies in the agreement’s fine print: these tokens are securely locked and are slated to undergo a structured vesting process from 2025 to 2028. This means that the SOL tokens will be progressively made available in monthly installments until January 2028. For instance, a segment of 7.5 million SOL procured by Alameda Research from Solana Labs will only become tradable on March 1, 2025, with another 61,853 SOL tranche unlocking on May 17, 2025.
Given these clarifications, Solana investors may find some solace, realizing that immediate market flooding concerns due to FTX liquidations are baseless.
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