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Solana’s lead over competitors and strong inflows support further bullish momentum even if the network saw a 10% drop in DApp activity.
Solana’s native token, SOL (SOL), saw a 22.5% decline between Jan. 6 and 13, testing the $169 level for the first time in 10 weeks. A subsequent 15% recovery by Jan. 15 couldn’t push SOL above $200, causing traders to fear that the drop in decentralized application (DApp) activity on the Solana network may hinder a near-term return to $230.
Solana’s 7-day onchain trading activity (USD, billion). Source: DefiLlama
Despite leading in onchain volume, Solana’s network activity fell 10.3% between Jan. 8 and 15, according to DefiLlama data. Negative performers include Raydium, down 23.3%, and Orca, down 2%. On the positive side, Lifinity saw a 27.7% increase in activity, and Stabble gained 29.7%.
Meanwhile, Ethereum saw a 9% increase in onchain volumes during the same period, with Arbitrum’s activity up 20%. Ethereum’s growth was driven by Curve Finance, Pendle, and Fluid, while Uniswap and Camelot were the main contributors to Arbitrum’s rise. The Base network’s largest decentralized exchange, Aerodrome, reported a 14% volume increase.
Solana’s TVL decline reflects broader market challenges
Evaluating DApp networks based solely on onchain activity isn’t ideal, as some applications — like lending, staking, gaming and synthetic assets — don’t rely on constant transactions. Therefore, monitoring trends in deposits, measured by total value locked (TVL) on each network, provides more accurate insights. Ethereum leads, while Solana remains firmly in second place.
Top blockchains ranked by deposits (TVL), USD billion. Source: DefiLlama
Despite a 5.9% monthly decline in TVL, Solana’s performance mirrors the broader challenges faced by the sector, with Ethereum leading the major platforms with an 18.1% drop in deposits. Solana’s TVL decline was largely driven by Jito, down 14.1%, and Marinade, down 12%. On Ethereum, the downturn was led by Lido and EigenLayer’s staking solutions. As such, the drop in Solana’s TVL shouldn’t be a major concern.
Beyond onchain metrics, Solana investors remain hopeful for a potential spot exchange-traded fund (ETF) approval in the United States. Under the leadership of outgoing Chair Gary Gensler, the US Securities and Exchange Commission has taken an anti-crypto stance, so investors expect a greater chance of a Solana spot ETF approval once President-elect Donald Trump assumes office and Gensler steps down.
Solana’s lead over competitors boosts chances for $230-plus SOL
Self-proclaimed quant trader Trisigma said on X that $1.5 billion of the USD Coin (USDC) stablecoin was minted on Solana’s network in just 15 days, pointing to the network’s low fees attracting both users and institutions. The same post noted that while crosschain USDC transfers still face challenges on Solana, the overall network infrastructure shows promising growth.
Related: Ethereum price rebound will take time, even if ETH data looks bullish
Solana may not directly challenge Ethereum, as most DApp users on its network are not focused on the same level of decentralization and are less concerned about the influence of the Solana Foundation in maintaining and developing its ecosystem. The high-performance hardware needed to run a Solana validator node potentially concentrates control among wealthier entities.
As long as Solana maintains its lead over direct competitors like BNB Chain and Tron, there remains a chance for SOL to break above $230 in the near term. Regardless of the potential approval of a spot Solana ETF, the strong inflows from memecoin launches and trading demonstrate SOL’s ability to benefit from a new wave of market entrants.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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