Solana's Star Fades: TVL Plummets 40% in Month

Solana (SOL), once hailed as a high-speed, low-cost Ethereum killer, is currently grappling with a significant downturn. The network's Total Value Locked (TVL) has plummeted by 40% in the past month, mirroring a broader decline in activity across its ecosystem. The memecoin frenzy that once fueled Solana's growth is also waning, contributing to periods of stagnation for SOL's price.

The cryptocurrency SOL, which previously surged to nearly $300, is now trading almost 52% below its all-time high. The price is at risk of falling below $110, as technical indicators suggest a potential visit to this level before encountering strong support. The question on everyone's mind is whether Solana's star is fading or if this is merely a temporary pause on its path to becoming a significant player in the crypto world.

One of the most alarming signs is the drastic decrease in Solana's Total Value Locked (TVL). The aggregate value and sum of assets locked within protocols on the network have collapsed by a staggering 39.2% over the past 30 days. This is Solana's largest month-over-month loss since the collapse of FTX in November 2022. At the height of Solana's success, its TVL was over $12.1 billion, while it is currently at $7.4 billion. This drop in TVL is generally viewed as a barometer of a blockchain's health, indicating a loss of investor confidence and a self-perpetuating cycle of collapsing liquidity and price erosion.

The TVL drop has not been consistent across all Solana-native DeFi protocols. Some platforms, such as Raydium, have been knocked harder than others, with its total value locked plunging 53% in the last 30 days. More robust dApps like Jupiter DEX, Jito, and Solend have also faced significant outflows, seeing their TVL decrease between 25% to 42%. This widespread DeFi activity decline has directly reflected in Solana's on-chain volumes, with trading volumes dropping from a healthy $97 billion a week in mid-January to just $11 billion a week. This sharp drop in transaction volume signals a significant slowdown of the Solana network, putting downward pressure on the SOL price