Solana’s native token, SOL, has been unable to reclaim the $145 level for nearly a month, as weakening on-chain activity weighs on market sentiment. Lower usage across decentralized applications is contributing to a softer outlook for the asset.
Data shows Solana’s total value locked (TVL) has fallen by more than $10 billion since peaking in September, pointing to a faster-than-anticipated slowdown in user engagement. TVL reached a record $15 billion in September but has trended downward since, with declining smart contract deposits increasing the amount of SOL readily available for trading.
At the same time, weekly revenue generated by Solana-based decentralized applications has dropped to roughly $26 million, down from about $37 million just two months ago, reflecting reduced transactional activity across the network.
Interest in memecoins
One of Solana’s key growth catalysts has also faded following the broader crypto market flash crash on Oct. 10. The sharp sell-off exposed vulnerabilities tied to leveraged trading and thin liquidity among smaller tokens, making traders more cautious about interacting with decentralized exchanges after an estimated $19 billion in liquidations.
Memecoin trading previously played a major role in boosting Solana’s ecosystem, particularly after the launch of the Official Trump token in January, which helped push Solana DEX volumes to $313.3 billion that month. However, DefiLlama data indicates that decentralized exchange activity has since declined by roughly 67%, helping explain the drop in DApp revenues.
Despite the slowdown, the decline in activity may reflect broader market conditions rather than a Solana-specific issue. Network fee data supports this view: Solana’s fees fell by 21% over the past 30 days, while rival chains saw steeper drops. BNB Chain fees declined by 67%, and Ethereum recorded a 41% decrease over the same period, according to Nansen. Meanwhile, transaction counts on Solana rose 6%, contrasting with a 42% decline on BNB Chain.
SOL leverage demand fades
Perpetual futures markets offer insight into trader positioning around SOL. Under balanced conditions, funding rates typically sit between 6% and 12% annually, with long positions paying to maintain leverage. When funding turns negative, it suggests rising bearish sentiment and waning demand for leveraged long exposure in SOL markets.
An experienced fintech marketer, now diving into Web3, crypto markets, and decentralized systems. Breaking down complex blockchain developments for accessible understanding.
