By misrepresenting their identity and positioning themselves as dozens of independent developers, the Macalinao brothers promoted the Saber protocol in social media, contributing to the double value counting.

How It Worked

The Macalinao brothers recognized the role played by the active developers’ community in investment valuations and expectations regarding the future potential of protocols and blockchain ecosystems. Therefore, they deliberately created an illusion of the active developers’ community working on the Saber protocol, thus artificially stimulating the investment demand for it and the entire Solana ecosystem. Moreover, the vast network of interlocking DeFi protocols was created in order to create the impression of billions of dollars being directed to the Saber protocol. As a result, the total value locked into the Solana ecosystem also tended to rapidly increase.

The protocols were built on the basis of one another, and the monetary value was calculated incorrectly, resulting in the systematic inflation of financial assessments. The army of fake developers proved to be comparatively successful in the short term as investors demonstrated the increased interest in the Saber protocol as well as the Solana ecosystem in general. As a result, the demand for them demonstrated the better dynamics as compared with the average market outcomes. However, after these schemes are revealed, they only contribute to the panic selling of SOL and related crypto projects.

Implications for Solana

The persistence of such schemes has proved to be highly negative for the Solana ecosystem, thus undermining investors’ confidence in the project. They tend to radically reconsider their assessments of its business and technological potential. Thus, the rapid correction may be transformed into the prolonged recession that seriously threatens the sustainability of the ecosystem. The current public statements largely condemn such misleading business practices. All major Solana representatives have radically disapproved such forms of price manipulations.

However, the major concerns outlined by investors refer to ensuring that similar risks can be effectively prevented in the future. Urgent improvements in monitoring DeFi projects and DAO accelerated programs are required. All stakeholders have become more critical of the TVL indicators. Thus, Solana’s ability to find the most effective solution that can allow differentiating it from other blockchains and the main competitors will largely determine its long-term positions. While scalability advantages are important, the existing vulnerabilities and deliberate value manipulations constitute the main threats in this field.

Investing in SOL: Short- And Long-Term Price Implications

The short-term potential for the Solana ecosystem remains questionable. In particular, the recent hackers’ attacks have revealed numerous vulnerabilities, and the fact of many DeFi schemes aimed at price manipulations being implemented on its blockchain also contribute to negative assessments made by the main stakeholders. Moreover, Ethereum’s Merge constitutes another major threat in the following few months due to the risks of Ethereum undermining Solana’s higher scalability. The conditions of the crypto market remain uncertain with different assessments regarding whether the local bottom had already been reached. Thus, the dominant short-term implications are rather negative as the scope of market risks has proved to be disproportionally higher than the existing market opportunities.

Technical analysis may also be used for making better-supported assessments regarding the major support and resistance levels as well as the optimal points of entry that will maximize the likelihood of positive investors’ financial results in the following weeks and months. There are several historical price levels that may be informative in terms of SOL’s capitalization dynamics.

How the Macalinao Brothers Created an Illusion of Active Community in the Saber Protocol - 1

Figure 1. SOL/USD Price Dynamics; Data Source — CoinMarketCap

The major support level is at the price of $25 that corresponds to the local minimum of the past few months. This level is crucial for avoiding the major capitulation of both short- and long-term holders. The major resistance level is at the price of $50 that may be sufficient for reversing the bearish sentiments and contributing to the rapid price restoration in the middle term. According to this scenario, the price level of $50 may also become the major support for the following months. Solana’s long-term implications remain uncertain, considering the interaction of both mixed on-chain and macrofinancial data. The effective risk management and stop losses should necessarily be used when opening long positions until a new trend line is formed.

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