Phantom Wallet Expands to Ethereum, Polygon as Solana Plummets 92% YTD

December 1, 2022

As heavily VC-dependent Solana unwinds from its FTX/Alameda exposure, developers behind Solana’s Phantom wallet are looking for greener pastures. Phantom recently announced that it is extending support for Ethereum and its scalability network Polygon.

Phantom Pivots to Ethereum and Polygon

As the central gateway into Solana’s ecosystem, the Phantom wallet will add support for Ethereum and Polygon. This was somewhat to be expected as Ethereum holds 57% of the DeFi market share at $30.82 billion total-value-locked (TVL).

Even Polygon, as Ethereum’s low-fee and fast scaling solution, has $1.25 billion TVL, which is 3.5x more than Solana’s present TVL of $354 million, at 0.65% DeFi market share. Brandom Millman, CEO and co-founder of Phantom, tweeted that the Web3 company is moving away from the mono-chain model altogether.

“It’s clear that self-custody is now more important than ever. But the multichain future feels uncertain with how people are expected to manage different wallets on different chains.”

Phantom’s three co-founders also have Ethereum experience, stemming from their work at 0x (ZRX), an open-source decentralized exchange. Phantom integrations are presently in the beta invite stage, while the public support for Ethereum and Polygon networks is scheduled for Q1 2023.

Phantom’s Multi-Chain Future

Phantom has over 2.5 million users while MetaMask has over 21 million. Nonetheless, this is quite impressive given Phantom’s relatively recent 1 million user milestone, achieved in November 2021. At the time, Millman said they are shooting for “somewhere in the 10 [million] to 50 [million] range”.

With Solana’s bleeding TVL, that range is out of bounds if Phantom were to remain a mono-chain wallet. In its new multi-chain Web3 future, Phantom aims to be “one wallet to access what you need seamlessly”. This includes full NFT support, providing NFT listings, spam burn, and NFT display across all file formats and devices.

For Web3 to gain mainstream adoption, it is clear that it needs to be user-friendly. New Phantom will switch between networks without the need to toggle.

“In the same way people don’t switch web browsers to access different websites, we believe web3 needs one wallet to access what you need seamlessly.”

This translates to fewer entry points for all dApps, so users don’t necessarily even know which blockchain they are currently using. Solana’s Wormhole bridge is one such interoperability approach by connecting to 17 other blockchain networks.

However, blockchain bridges remain vulnerable hacking points, responsible for the majority of stolen funds this year, at $1.4 billion. An alternative to bridges is closer integration. This could be happening between Solana and Cosmos thanks to Nitro Labs and Eclipse.

In July 2021, the Solana Foundation raised $9 million for Phantom, out of a total of $118 million in funding. This October, the Solana Foundation gave Eclipse a development grant to support Solana VM rollups.

“Eclipse paves the path for Solana’s runtime to communicate with Cosmos chains through IBC [Inter Blockchain Communication Protocol].”

Anatoly Yakovenko, Solana co-founder and angel investor in Eclipse

What’s Going On With Solana?

Solana always had the reputation of a more centralized blockchain, thanks to its heavy venture capital (VC) funding. Across 9 funding rounds that delivered a total of $315.8 million funding for Solana, Polychain Capital, Multicoin Capital, and Andreessen Horowitz were lead investors.

Unfortunately, Sam Bankman-Fried’s Alameda Research was involved in Solana’s initial coin offering (ICO). Presently, Solana Compass shows that the now-bankrupt Alameda holds 48,648,493 SOL tokens worth over $647 million.

Of course, this is now in the hands of bankruptcy liquidators, heading to liquidate FTX/Alameda funds for creditors and clients. Solana’s total SOL supply is 533.6 million while its circulating supply is 362.9 million, or 68%. Out of that circulating supply, Alameda’s bankruptcy SOL share is 13.4%.

This represents a massive sell pressure, waiting to unfold. Moreover, SBF also funded key dApps in the Solana ecosystem, such as Serum (SRM), Solana’s equivalent to Uniswap. Due to this relationship with SBF’s fallen crypto empire, the Solana Foundation disclosed that it has additional asset exposure:

~3.24m shares of FTX Trading LTD common stock
~3.43m FTT tokens
~134.54m SRM tokens

As FTX (FTT) collapsed by -97%, it pulled other threads with it. Together with SRM losing -94% of value, SOL dropped by -92% year-to-date. With that said, Solana could be going through a decentralization process to come out stronger in the end. However, that also depends on resolving the blockchain’s frequent outages.

This article originally appeared on The Tokenist

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