- Solana’s TVL is down 97% since November 2021.
- Network tariffs and revenues have fallen sharply over the past year.
The DeFi TVL of Layer 1 (L1) blockchain Solana [SOL] has returned to April 2021 lows, data from Defillama revealed. After peaking at $10 billion on November 9, 2021, it is down 97% since then. At the time of writing, Solana’s TVL was $286.86 million.
Source: DefiLlama
Read Solana’s [SOL] Price Forecast 2023-24
Solana’s many downtimes and her ties to the disgraced Bankman-Fried
Since its launch, the Solana network has been plagued by a series of chain stops due to network overload caused by activities such as botting and spam. In the past year alone, the network suffered a total of 10 major outages, the most recent being on Feb. 28, when the chain experienced a “major forking event.”
While Solana touts itself as a cheaper tier 1 than Ethereum [ETH]the frequent downtimes over the past year have eroded confidence in it, causing some of its protocols to experience a decline in network activity, hence TVL’s steady decline.
Also, Solana’s ties to disgraced founder Sam Bankman-Fried contributed to the significant drop in his TVL when cryptocurrency exchange FTX surprisingly went under in November 2022.
It is believed that Bankman-Fried could have been Solana’s most prominent lender. Critics have also argued that the rise in the value of the SOL coin and its associated assets between 2020 and 2021 was to some extent influenced by the interventions of Bankman-Fried and Promotion on the market.
Solana’s TVL plummeted 32.4% within 24 hours of FTX’s collapse, according to data from DefiLlama. Since then it has dropped by 32%.
State of the chain
This year, Solana’s network activity has been on a downward trend since mid-May, data from Artemis showed. According to the data provider, the number of unique wallet addresses sending on-chain transactions on the network on a daily basis has dropped 53% since May 18.
Source: Artemis
Similarly, information from the same data provider revealed a corresponding decline in the number of transactions since the end of June. With 15.79 million completed transactions on the blockchain as of July 9, the total number of daily transactions recorded on Solana has dropped 37% since June 28.
Realistic or not, here is the market cap of SOL in terms of BTC
Source: Artemis
With regard to network fees and revenue, data from Token terminal confirmed a respective drop of 66% over the past year. Due to a decline in Solana usage over the past year, the fees received for transactions completed by users on-chain have decreased.
Data from Token Terminal also showed that Solana’s annualized fees were $11.9 million. And the proceeds from that amounted to $5.95 million.