Solana DApp volumes shed 10%, but a rally to $230 is still possible

Solana’s native token SOL (SOL) saw a 22.5% decline between Jan. 6 and Jan. 13, testing the $169 level for the first time in ten weeks. A subsequent 15% recovery by Jan. 15 couldn’t push SOL above $200, causing traders to fear that the drop in decentralized application (DApp) activity on Solana network may hinder a near-term return to $230.

Despite leading in on-chain volume, Solana’s network activity fell 10.3% between Jan. 8 and Jan. 15, according to DefiLlama data. Negative performers include Raydium, down 23.3%, and Orca, down 2%. On the positive side, Lifinity saw a 27.7% increase in activity, and stabble gained 29.7%.

Meanwhile, Ethereum saw a 9% increase in on-chain volumes during the same period, with Arbitrum’s activity up 20%. Ethereum’s growth was driven by Curve Finance, Pendle, and Fluid, while Uniswap and Camelot were the main contributors to Arbitrum’s rise. Base network’s largest decentralized exchange (DEX), Aerodrome, reported a 14% volume increase.

Solana’s TVL decline reflects broader market challenges

Evaluating DApp networks solely based on onchain activity isn’t ideal, as some applications like lending, staking, gaming, and synthetic assets don’t rely on constant transactions. Therefore, monitoring trends in deposits, measured by total value locked (TVL) on each network, provides more accurate insights. Ethereum leads, while Solana remains firmly in second place.

Despite a 5.9% monthly decline in TVL, Solana’s performance mirrors the broader challenges faced by the sector, with Ethereum leading the major platforms with an 18.1% drop in deposits. Solana’s TVL decline was largely driven by Jito, down 14.1%, and Marinade, down 12%. On Ethereum, the downturn was led by Lido and EigenLayer’s staking solutions. As such, the drop in Solana’s TVL shouldn’t be a major concern.

Beyond onchain metrics, Solana investors remain hopeful for a potential spot exchange-traded fund (ETF) approval in the United States. Under the leadership of Gary Gensler, the current US Securities and Exchange Commission has taken an anti-crypto stance, so investors expect a greater chance of Solana’s spot ETF approval once President-elect Donald Trump assumes office.

Solana’s lead over competitors boosts chances for $230+ SOL 

Self-proclaimed quant trader tri_sigma_ said on X that $1.5 billion of USD Coin (USDC) stablecoin was minted on Solana’s network in just 15 days, pointing to the network’s low fees attracting both users and institutions. The same post noted that while crosschain USDC transfers still face challenges on Solana, the overall network infrastructure shows promising growth.

Related: Ethereum price rebound will take time, even if ETH data looks bullish

Solana may not directly challenge Ethereum, as most DApp users on its network are not focused on the same level of decentralization and are less concerned about the influence of the Solana Foundation in maintaining and developing its ecosystem. The high-performance hardware needed to run a Solana validator node potentially concentrates control among wealthier entities.

As long as Solana maintains its lead over direct competitors like BNB Chain and Tron, there remains a chance for SOL to break above $230 in the near term. Regardless of the potential approval of a Solana spot ETF, the strong inflows from memecoin launches and trading demonstrate SOL’s ability to benefit from a new wave of market entrants.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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