Solana-based DeFi portfolio management protocol Friktion has deprecated its front-end application and asked users to withdraw their money. Friktion is among the few cryptocurrency platforms that offer structured products in the Solana space.
Cryptocurrency platform shuts down after TVL collapse
cryptocoin.com As we reported, Friktion announced in a statement on January 27 that the front-end application was closed. The project stated that the decision was not made easily after many turbulent crashes across the industry. After the shutdown, Friktion put the Volt in pull-only mode. Volt are investment strategies initiated by the project. The project’s website will no longer offer the same services, will only work in withdrawal mode for all Volts and will invalidate the deposit. Friktion’s Volts are structured products for DeFi investments that allow investors to get a share of the revenues of investment pools, according to the company’s page.
Friktion has made the difficult decision to sunset its user platform, a process beginning with moving all Volts into Withdrawal-Only mode on Friktion’s User Interface https://t.co/zrRbHgr6FV starting 25 Jan 2023.
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— Friktion⚡ (@friktion_labs) January 27, 2023
The protocol deprecation only affects the front-end application. Friktion’s DeFi protocol is still accessible on-chain for users knowledgeable enough to interact with the platform this way. The cryptocurrency platform reached nearly 20,000 user wallets in the first half of 2022, surpassing $3 billion in transaction volume and over $160 million in total locked value (TVL) in the first half of 2022 before being hit by the crypto winter. This metric tracks the volume of assets controlled by a DeFi protocol. Friktion’s TVL sank, like the rest of the DeFi market, amid the year-long bear market of 2022. According to DeFiLlama data, the TVL of the protocol currently stands at $5 million as of reporting date. In November 2022, the company even launched undercollateralized lending targeting institutional investors’ demand for DeFi.
Solana’s DeFi landscape after the FTX crash
According to experts, closing Friktion could be a stumbling block to Solana’s DeFi aspirations. The platform launched undercollateralized lending for institutional clients last year and is among a series of protocols aimed at expanding the ecosystem’s returns market with a variety of structured products. Platforms like Exotic Markets are also racing to bring structured products into the Solana DeFi space. Exotic Markets has raised $5 million from venture capital backers.
But these DeFi platforms have to deal with the consequences of the FTX collapse. Former FTX CEO Sam Bankman-Fried was a major supporter of the Solana space. The Solana ecosystem has been one of the hardest hit since the FTX crash. 4DeFi has been slow to recover as a whole despite the bounce seen in the market since the beginning of the year. DeFi TVL remained largely stable even as the crypto market capitalization exceeded $1 trillion.
