Solana's SOL Drops 10% Amid Token Unlock Concerns

Solana's native token, SOL, experienced a significant drop of 10% following a sharp rejection at the $185 level on May 23. The price decline brought SOL to the $167 mark, the lowest point in over a week, raising concerns among traders about the underlying reasons for the drop and the potential for further decline to the $142 support level.
Despite the price drop, Solana remains the second-largest network in terms of total value locked (TVL), with a current TVL of $11 billion, marking a 14% increase over the previous month. This growth is attributed to notable developments such as a 48% increase in Raydium’s deposits and a 28% increase in Marinade’s TVL. However, other decentralized applications (DApps) like Jupiter, Kamino, and Drift showed more modest growth.
Solana's strong network activity is evident in its trading volume, which reached $94.8 billion on decentralized exchanges (DEXs) over the past 30 days, surpassing Ethereum's $64.8 billion in onchain activity. This high throughput, however, comes with trade-offs, particularly regarding validator incentives linked to MEV (maximum extractable value). Validators can increase their earnings by reordering transactions, which opens the door to sandwich attacks and front-running practices that harm regular traders. According to Dan Robinson, a researcher, MEV is Solana’s “biggest problem.”
Another factor weighing on investor sentiment is the anticipated unlocking of 3.55 million SOL between June and August, valued at approximately $600 million at current prices. Analysts note that most of these tokens were acquired from the bankrupt estate at around $64, potentially limiting the token’s upside. Additionally, although Solana offers an 8% yield for validators, well above Ether’s 3%, its supply expands at an annualized rate of 5.2%, resulting in a lower net staking return compared to yields offered by many DApps on stablecoin deposits.
Traders are also questioning the long-term viability of Solana-based memecoins after several posted sharp weekly declines. Official Trump (TRUMP) dropped 24%, while FARTCOIN and POPCAT lost 20%, and Pudgy Penguins (PENGU) fell 17% over the past seven days. A sustained drop in DEX activity would further pressure SOL’s performance. Despite these risks, Solana's strong performance in both trading volume and total deposits suggests there is no immediate sign of underperformance relative to the broader altcoin market. However, token unlocks scheduled over the coming months significantly reduce the odds of SOL reclaiming $200.
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