Solana Total Value Locked Reaches Yearly High
23 Aug, 2024 ● Vijesti o kovanicama
Solana’s native token, SOL, has struggled to surpass the $150 resistance level since August 12.
Despite this, certain network metrics have shown positive signs, including a significant increase in total deposits within its decentralized applications, reaching their highest point since October 2022.
This has led traders to question whether these improvements in network fundamentals could help push SOL’s price back up to $190, and what factors might be holding it back.
One factor dampening investor enthusiasm is Cboe Global Markets’ recent removal of the 19b-4 forms for spot Solana exchange-traded funds (ETFs) from its website on August 16.
Some market observers, including finance lawyer Scott Johnsson, believe that this action indicates an informal rejection of the Solana ETF by the United States Securities and Exchange Commission (SEC), in line with Chair Gary Gensler’s previous stance.
Eric Balchunas, a senior ETF analyst at Bloomberg, shares this sentiment, noting that while the S-1 filings from the ETF issuers are still active, the likelihood of approval is low, with a potential change hinging on the outcome of the U.S. presidential election, particularly if Donald Trump were to win.
Consequently, investor optimism about the potential launch of a spot Solana ETF has waned, reducing the impact of Solana’s positive network metrics.
Crypto trader and investor CoinMamba, for instance, suggests that Solana’s appeal has diminished as the average fees of Ethereum have dropped to around $1, a level not seen since July 2020, while other blockchains are gaining momentum with memecoin launches, a major driver of demand for the SOL token.
CoinMamba also argues that Solana needs to “find a new narrative,” implying that the future appreciation of SOL’s price depends on exploring new opportunities and discovering decentralized applications (DApps) that can provide a competitive advantage.
However, this view overlooks the fact that PayPal USD, a stablecoin issued on the Solana network, reached $620 million in issuance despite being launched less than three months ago in May 2024.
Moreover, several projects continue to be developed on Solana, many of which have secured substantial funding from experienced venture capitalists.
Notable examples include Colosseum, which is managing Solana’s hackathon programs after raising $60 million to accelerate ecosystem growth, and Decentralized Autonomous Wireless Network (DAWN), a decentralized broadband project that recently raised $18 million.
Although success is not guaranteed, the expansion of the Solana ecosystem is clear, as evidenced by the rising total value locked (TVL) on the network, suggesting that SOL’s price still has potential to improve.
As of August 22, Solana network DApps collectively held 34.9 million SOL, the highest level since October 2022, representing a 13.7% increase from the previous month.
Highlights from the past 30 days include the decentralized exchange Jupiter, which achieved a TVL of $1.06 billion, and Kamino, a lending and leverage platform that currently holds $1.48 billion in deposits.
Additionally, in USD terms, Solana’s TVL stands at $5 billion, surpassing its closest competitor, BNB Chain, which has $4.5 billion.
While growth in TVL is generally seen as a positive indicator, it doesn’t necessarily reflect an increase in user numbers or activity, as most DApps do not require a large deposit base.
The number of unique active addresses interacting with these applications is a more accurate measure of user engagement.
Over the past 30 days, half of Solana’s top DApps have seen a decline in user numbers, with most of the growth concentrated on Raydium and a recently launched high-risk decentralized finance platform.
On the other hand, some previously popular projects like Helio, Solend, and Marginfi have recorded fewer than 50,000 active addresses each.
Therefore, Solana’s TVL growth alone is not sufficient to support a short-term SOL price rally to $190 or higher.
Sources:
https://cointelegraph.com/news/solana-tvl-hits-near-1-year-high-will-sol-price-follow
