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The native token of the Solana network, SOL, has not closed above $145 since July 3. This lackluster performance can partly be explained by the decreased interest in cryptocurrencies, which caused the total market value of the sector to drop by 5% in nine days. Despite this, SOL underperformed its competitors with a 7.8% drop between July 3 and July 12, while BNB and Ethereum fell by 6.5% during the same period.
What is Happening in the Solana Ecosystem?
Some tokens in the Solana ecosystem have significantly underperformed, which also explains the reduced demand for SOL. When participants in the Solana ecosystem lose money, less money circulates in decentralized applications, negatively affecting SOL demand.
Notable declines between July 3 and July 12 include a 24% drop in DogWifHat (WIF), an 18% correction in Helium (HNT), and an 18% correction in Jito (JTO). In the grand scheme, SOL remains the fourth-largest cryptocurrency by market value, excluding stablecoins, with a market cap of $65 billion.
To put things into perspective, competitors Toncoin (TON) have a market cap of $18.4 billion, Tron $12 billion, and Avalanche $10.1 billion. Moreover, the total value locked (TVL) in Solana matched that of BNB Chain for the first time on July 5, and the gap has remained minimal since then.
Details on the Matter
According to DefiLlama data, BNB Chain had more than double Solana’s TVL value by the end of 2023. The $2 billion gap in favor of BNB Chain has now disappeared, indicating that investors are allocating significantly more capital to the Solana network. Highlights of Solana include liquid staking Jito with $1.6 billion in deposits, followed by Marinade with $1.1 billion, and Kamino approaching $1.1 billion in TVL.
Tron ranks second with a TVL value of $7.6 billion, but 72% of this comes from a single decentralized finance (DeFi) application, JustLend. Analysts have strong concerns given that 94% of its deposits come from a Wrapped Bitcoin version with no solid proof of reserves. Solana is in direct competition with BNB Chain to take the second spot in deposits.
