The native token of Solana, SOL (SOL), experienced a 9% decline between March 28 and April 4, while several significant indicators saw an increase during the same timeframe. Despite the decrease in SOL’s valuation, the Solana network continues to excel beyond its rivals, sustaining its position as the second in deposits and trading volume. Traders are now contemplative about how long it will take for the price of SOL to mirror this on-chain robustness.
Solana surpasses competitors in TVL deposits and DEX volumes
The waning interest of investors in SOL might be associated with the staking unlock of 1.79 million SOL on April 4, valued at over $200 million. The selling pressure is evident, as these tokens were initially staked in April 2021, when SOL was priced near $23. Additionally, a reduction in enthusiasm for memecoins, which had significantly driven new user engagement on Solana, plays a role. With a decrease in speculative inflows, the rise in activity may not lead to immediate price advancement.
A range of meme-inspired cryptocurrencies, including WIF, PENGU, POPCAT, AI16Z, BOME, and ACT, have seen declines of 20% or more in the past week. Nevertheless, despite deteriorating market circumstances, the Solana network has outperformed some of its rivals. Its total value locked (TVL) surged to its highest point since June 2022, while decentralized exchange (DEX) volumes displayed remarkable resilience.
Deposits in Solana network’s DApps increased to 53.8 million SOL on April 2, reflecting a 14% growth from the preceding month. In terms of U.S. dollars, the total of $6.5 billion stands $780 million ahead of its nearest competitor, BNB Chain. Solana’s leading DApps by TVL comprise Jito (liquid staking), Jupiter (prominent DEX), and Kamino (lending and liquidity platform).
Solana gains backing for scalability and Web3 orientation despite MEV issues
While Solana is not yet a direct competitor to Ethereum’s $50 billion TVL, its on-chain data illustrates greater resilience when compared to BNB Chain, Tron, and Ethereum layer-2 networks such as Base and Arbitrum. In the realm of decentralized exchange (DEX) volumes, Solana commands a 24% market share, while BNB Chain captures 12% and Base takes 10%, according to data from DefiLlama.
Although Ethereum has regained dominance in DEX volumes, Sol has exhibited strong resilience following the collapse of the memecoin bubble. For perspective, Raydium’s weekly volumes plummeted 95% from the historic high of $42.9 billion reached in mid-January. Nevertheless, Solana has proven that traders value its emphasis on primary layer scalability and cohesive Web3 user experience, despite ongoing criticism related to maximum extractable value (MEV).
In summary, MEV arises when validators rearrange transactions for financial gain. This practice is not exclusive to Solana, but certain market participants—including user Cbb0fe, a self-identified decentralized finance (DeFi) liquidity provider—have expressed concerns regarding insider gatekeeping. While not explicitly stated, the criticism likely pertains to the incentives provided by Solana Labs to counterbalance the substantial investment and maintenance expenses associated with certain validators.
Proponents of altering Solana’s token emissions contend that the rewards gained through MEV already offer adequate incentives for validators to secure the network, negating the necessity for additional inflationary pressures on SOL. Meanwhile, Loring Harkness, a core contributor to Shutter Network, promotes the idea of encrypting transactions before they enter the mempool as a strategy to prevent validators from altering their order.
The escalation of Solana’s TVL and its fortitude in DEX market share may not suffice for SOL to revisit the $200 level observed in mid-February. However, it has solidly established its second-place standing behind Ethereum as a premier platform for decentralized applications, bolstered by continuous activity, infrastructure advancement, and growing interest from both developers and users.
This article serves solely for general informational purposes and is not meant to be construed as legal or investment guidance. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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