Solana Drops 5.67% Amid Upcoming Protocol Upgrades

Solana's latest price was $162.42, down 5.667% in the last 24 hours. Solana and Phylax are set to launch significant protocol upgrades in August 2025, focusing on enhancing DeFi functionalities and improving network infrastructure. These upgrades are expected to attract substantial institutional investments and drive increased market activity. The enhancements aim to improve transaction speeds, reduce latency, and introduce new smart contract capabilities, positioning both networks for greater adoption and market engagement.

Institutional interest in Solana and Phylax is rising due to anticipated protocol upgrades that promise enhanced network efficiency and new DeFi capabilities. These factors contribute to expectations of higher returns and reduced operational risks, attracting more capital from crypto funds and traditional financial institutions. The upgrades are anticipated to stimulate higher trading volumes and liquidity, driven by improved network performance and expanded DeFi use cases. Historically, upgrades on Ethereum and Polygon led to rapid increases in Total Value Locked (TVL) and trading activity, suggesting similar patterns for Solana and Phylax.

Similar upgrades in Ethereum and Polygon have previously led to rapid surges in Total Value Locked (TVL) and trading volumes. This pattern suggests the latest upgrades might replicate such outcomes, attracting both retail and institutional interest. Experts emphasize the importance of these upgrades aligning with anticipated market shifts. Broader institutional acceptance may catalyze further integration of digital assets into mainstream financial systems.

Bitwise, VanEck, and other stakeholders have urged the SEC to approve liquid staking tokens for Solana ETFs, enhancing investor returns and capital efficiency. These tokens, particularly JitoSOL, could reshape Solana market dynamics by improving liquidity and reducing risks, pending the SEC's decision. The organizations argue that including liquid staking tokens enhances liquidity and minimizes risks, potentially offering higher returns for investors. This strategy could affect how investment products are structured moving forward.

If approved, the regulatory decision will establish a precedent for integrating staking tokens into ETFs, influencing both the financial landscape and investment strategies related to Solana and similar assets. This advocacy could shift market dynamics by encouraging the development of additional staking tokens within investment trusts. Analysts are closely monitoring the SEC's decision and its broader implications. Historical guidance suggests that introducing these tokens might enhance investment options without categorizing staking as securities transactions. This positions blockchain developments strategically.

July was an interesting month for Solana, mainly because the first U.S. staking-based ETF was launched during the month. Rex Osprey, the ETF issuer behind the ETF, just announced the first-ever Solana staking dividend. Rex Osprey just announced a $600,000 payout as its first staked Solana ETF dividend. While the figure might seem relatively low, it was worth noting that the ETF has only been trading since mid-July. More specifically, it only traded for 12 days and still managed to eke out a significant dividend yield. The Solana ETF’s first dividend payout was a key milestone because it was proof of concept, especially for staking-based ETFs. This performance suggested that the dividend might have been higher if it had been around longer. However, it is worth noting that the dividend payout may have been heavily influenced by the prevailing market conditions and network performance during the month.

The Solana ETF received $137.4 million worth of liquidity inflows in the 12 days that it was active. This figure paled in comparison to the level of liquidity flows that Bitcoin and Ethereum ETFs collectively registered during the same period. BTC and ETH ETFs were much higher because they were backed by multiple individual ETFs. In Solana’s case, it was just REX-Osprey. Moreover, the timeline was relatively short, which could have limited the potential for higher liquidity inflows.