Solana (SOL) sees decline in NFT and DeFi usage

Is the Solana summer over? Seasonal variations may indicate that, but if that’s enough for you, blockchain usage across both the defi and NFT landscape has been falling of late. Competing chains are making targeted and dedicated efforts to become more involved in both defi and NFT, leading to major growth and investment in the space.

Let’s take a brief look at what the numbers reflect, why this might be the case, and where we go from here.

DeFi Nosedive

According to DefiLlama TVL data, Solana has dropped to number 8 in total TVL, about a third lower than a month ago and over ten percent lower than just a week ago. At the peak of the bull market late last year, Solana’s defi TVL amassed north of $10 billion – but today stands at less than $1 billion, with over a quarter of Solana’s TVL residing within the lending platform Solend.

TVL is heavily influenced by underlying asset prices (so as the price of SOL or other digital assets goes down or up, so do TVL protocols), so in general all blockchains have seen a decline in TVL throughout the defi as the market has been in bear mode year.

However, Solana’s descent has been at a higher clip than its competitors, and the chain is in serious danger of falling out of the top 10 in defi TVL. It didn’t help to have the $100M+ exploitation of Mango Markets in recent weeks, which ended with a botched premium that drained the protocol, but refunded retail investors.

However, it is not all “doom and gloom” for Solana, as there are many opportunities for growth and development beyond the defi. However, the picture around NFTs does not seem much brighter either.

NFTs: Solana Falling Out of the #2 Spot?

Solana has long been considered the de facto #2 in all NFTs behind Ethereum. Could their positioning be at risk? Never say never, but the NFT ecosystem at large continues to grow, and so does the threat to Solana’s positioning.

At one point over the weekend, data aggregator CryptoSlam revealed that Solana had dropped to the #3 spot:

Mamba elaborated that this data was arguably inaccurate since it did not properly allocate Magic Eden data. Even if we take laundering out of the picture across all blockchains (a factor that often complicates calculations and muddies data), and even if we assume that Solana is solidly positioned as #2 in NFTs, it is indisputable that there are competing links that are on the attack front.

Newly created Aptos blockchains, and several “legacy” (relatively speaking) chains such as Cardano, Avalanche, Hedera and even Ripple have made solid progress in NFT investment and community building. These chains are certainly not on Solana’s level – but they are threats that are certainly on the radar of any NFT lover.

Featured image from Pixabay, Charts from TradingView.com

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