Important takeouts:
Solana’s native token Sol (Sol), fell 10% after a sharp rejection at the $185 level on May 23rd. The current $167 mark is the lowest in over a week, with traders questioning the reasons for the recent decline and whether SoL could revisit its $142 support level.
Despite the price drop, the Sol Holder can get some comfort in Solana’s position as the second largest network in terms of locked total value (TVL). Still, Ethereum’s advantage is unchallenged, supported by a wide tier 2 ecosystem that offers low prices and high scalability.
Solana’s current $11 billion TVL rose 14% the previous month, but Ethereum has seen even stronger growth. Notable developments in Solana include a 48% growth in Raydium sediments and a 28% increase in Marinade’s TVL. However, growth was modest in other distributed applications (DAPPs), such as Jupiter, Camino and Drift.
Solana’s volume and fees exceed Ethereum
Bulls believes Solana’s location is secure thanks to its efficient integration of mobile wallets and Web3 applications. Defilama data shows that over the past 30 days, Solana’s Decentralized Exchange (DEXS) trading volume reached $94.8 billion, surpassing its on-chain activity of $64.8 billion.
Sol Bears highlights the rise in DEX activity in Ethereum’s Layer-2 ecosystem, which reached $59.2 billion in the last 30 days. This trend is undoubtedly important, but has not been converted to a higher price. With Ethereum, Rollups can integrate data into blobs and reduce costs, but Solana captures more value from Onchain activities.
This contrast is evident in the fee data. Over the course of 30 days, Solana generated a fee of $48.7 million compared to Ethereum’s $36.9 million, despite Ethereum’s significantly larger deposit base. Meanwhile, the BNB chain has only been delayed by $15.1 million despite recent increases, making it easier for projects to artificially inflate volume numbers.
Another factor that weighs investors’ feelings is expected to unlock 3.55 million SOLs between June and August. This is worth around $600 million at its current price. Analysts note that most of these tokens are acquired from bankrupt FTX/Alameda Estate for around $64, which could limit the benefits of the token.
According to StakingReards, Solana offers 8% yields for validators, well above Ether’s 3%, but its supply expands at an annual rate of 5.2%. As a result, Sol’s netstaking returns are lower than the yields offered by many Dapps on Stablecoin deposits.
Sol suffers from declining interest in MEV and MemeCoin
The high throughput of Solana Network involves trade-offs, particularly with regard to validator incentives linked to MEVs (maximum extractable values). Validators can increase revenue by sorting transactions. This opens the door to sandwich attacks and front-running practices that harm regular traders. According to paradigm researcher Dan Robinson, MEV is Solana’s “bigest problem.”
Traders are also questioning the long-term viability of Solana-based Memecoin after posting some sharp weekly declines. Official Trump (Trump) fell 24%, Fartcoin and Popcat lost 20%, while Pudgy Penguins (Pengu) fell 17% over the past seven days. The persistent drop in DEX activity puts Sol’s performance into even more pressure.
Despite these risks, Solana’s strong performance in both trading volume and total deposits suggests there are no immediate signs of immediate performance compared to the broader Altcoin market. However, it will significantly reduce the chances of SOL retrieving $200 by unlocking scheduled for the coming months.
