At their peak last November, decentralized finance (DeFi) applications stored more than $10 billion on the Solana network, its popularity being led by high-flying proponents including Sam Bankman-Fried, the founder of the FTX crypto exchange, Multicoin Capital, Sino Global Capital and other venture funds.
Bankman-Fried’s downfall translated to generally falling sentiment for Solana, given his prominent endorsement of the network. He once infamously told a crypto trader on Twitter: “I'll buy as much SOL has you have, right now, at $3...Then go f**k off," referring to the blockchain's native token.
While the $10 billion TVL on Solana has declined over the past year, with the price of SOL contributing to that drop, the past two weeks have been more drastic. More than $700 million has exited Solana-based applications, a 70% drop from the $1 billion in TVL on Nov. 2, when CoinDesk first reported on the collusion between treasury accounts at FTX and its sister company, Alameda Research.
SOL’s 50% price drop has contributed to that fall, alongside falling prices of related DeFi tokens.
Lending and borrowing platform Solend took the biggest hit both in percentage and value terms. It held over $280 million on Nov. 2 and now holds under $30 million. Data show a vast amount of stablecoins, wrapped bitcoin tokens and Solana-based tokens have left the protocol.
Data from DeFiLlama show Solana-based decentralized exchanges (DEXs) Raydium and Orca are now the largest decentralized applications (dApps) on the network, locking up over $51 million and $46 million respectively. Both have seen over 40% in liquidity exit the platform in the past week. And both held over $150 million just a few weeks ago.
Amid all the drama, some say the declines might help the market find a fair value for Solana and other networks.
“Solana has undoubtedly taken a massive blow, and the consequences of this blow seem far more dramatic and painful than for other blockchains,” Alexei Kulevets, co-founder of Walken told CoinDesk in a Telegram message. “Yet we’re in the midst of bear market, restless and unpredictable as it may be, it will eventually reveal the true worth of projects and token."
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