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Solana’s native token SOL, experienced a 13% drop over the last seven days, falling to the $101 level, which distanced Solana from the top 3 rankings in market value. The decline in SOL price could cause investors to fear that the peak demand for SOL has passed as the airdrop frenzy subsides. Compared to rival blockchain networks, the activity on the Solana network seems to support the downward trend.
Interest in Solana Decreases
Part of SOL’s price correction can be attributed to the poor performance of Solana SPL tokens, including Jito (JTO), Jupiter (JUP), and Dogwifhat (WIF) since February 19. As a result, investors expecting gains from potential airdrop events are negatively impacted as new listings are often priced in comparison to existing alternatives.
The demand for SOL is not solely based on airdrop events, as there are dozens of decentralized applications (DApps) currently operating on the network. For instance, the decentralized exchange Raydium had 172,440 active addresses last week alone. Similarly, the NFT marketplace Magic Eden attracted 167,930 active users to its platform during the same period.
The volume of Solana’s DApps for the week up to February 21st totaled $813 million, which is significantly lower than Polygon’s $2.9 billion and BNB Chain’s $5.2 billion. Solana was the only blockchain ecosystem in the top 7 that did not show an increase in volume during this period. Additionally, while the number of active addresses on Solana increased by 5%, Ethereum’s network saw a 14% increase and BNB Chain experienced a 27% rise.
TVL Ratio Continues to Rise
Measured by the Total Value Locked (TVL), the amount of SOL invested in the network’s DApps reached 37.7 million on February 17th, marking the highest level since November 2022. More importantly, the current TVL of 36.3 million SOL represents a 13.5% increase compared to the previous month, indicating an overall increase in demand for SOL independent of airdrop expectations.
Furthermore, according to StakingRewards, the share of SOL staked in the native validation process reached 67.3% on February 21st. Typically, an increasing TVL and staking rate indicate a lower tendency for short-term selling pressure, which means holders are not significantly affected by the recent price correction.
