Solana's Strength: TVL & DEX Volume Surge
Solana's native token, SOL, experienced a 9% drop between March 28 and April 4. However, several key on-chain metrics reveal a contrasting story of network strength. Even with the price downturn, Solana maintains its position as the second-largest blockchain by deposits and trading volume, raising questions about the future price of SOL.
Solana Outpaces Competitors in TVL and DEX Volume
The recent decline in SOL's price might be attributed to the April 4th unlocking of 1.79 million SOL (over $200 million). This, coupled with waning interest in memecoins—a significant driver of Solana's user adoption—has likely dampened speculative inflows. This means that increased network activity may not immediately translate into higher prices.
Many memecoins saw significant declines (20% or more in the past week). Despite this challenging market, Solana's Total Value Locked (TVL) reached its highest point since June 2022, demonstrating resilience. Decentralized Exchange (DEX) volumes also showed remarkable strength.
On April 2nd, Solana network DApps held 53.8 million SOL in deposits—a 14% monthly increase. This equates to approximately $6.5 billion, significantly outpacing its closest competitor, BNB Chain, by $780 million. Leading Solana DApps by TVL include Jito (liquid staking), Jupiter (DEX), and Kamino (lending).
Scalability and Web3 Focus Despite MEV Concerns
While still trailing Ethereum's $50 billion TVL, Solana's on-chain data showcases superior resilience compared to BNB Chain, Tron, and Ethereum layer-2 networks like Base and Arbitrum. In DEX volume market share, Solana commands 24%, exceeding BNB Chain's 12% and Base's 10% (DefiLlama data).
Although Ethereum leads in DEX volumes, Solana's performance post-memecoin bubble is noteworthy. Raydium, for example, saw a 95% drop from its all-time high. Yet, Solana's focus on base-layer scalability and Web3 user experience continues to attract traders, despite ongoing Maximum Extractable Value (MEV) concerns.
MEV, the reordering of transactions by validators for profit, is a concern for some, like DeFi liquidity provider Cbb0fe, who points to potential insider gatekeeping related to validator incentives. Proposals for reducing Solana's token emissions and encrypting transactions before they enter the mempool aim to address these issues.
While SOL may not immediately retest its mid-February high of $200, Solana's robust TVL growth and DEX market share solidify its position as a leading decentralized application platform. This is driven by consistent network activity, infrastructure development, and growing developer and user interest.
Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice.
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