- Solana’s key DeFi indicators showed signs of recovery in an otherwise under par February
- SOL’s high volatility kept investors on their toes
According to an 18 February tweet by Kamino Finance, Solana’s [SOL] decentralized exchange (DEX) activity was better than other chains in 2023 if a particular metric was put into consideration.
DeFi velocity has recently proved an interesting metric in gauging the vitality of @solana DeFi
According to recent statistics, Solana has displayed by far the highest velocity of all DeFi ecosystems
Here’s why it matters????
— Kamino Finance (@Kamino_Finance) February 17, 2023
How much are 1,10,100 SOLs worth today?
Called ‘DeFi Velocity’, the metric basically measures the trading volume versus total value locked (TVL) on a blockchain. The report highlighted that Solana’s average DeFi velocity for January stood at 0.25, more than twice of the second-ranked Polygon [MATIC] on the list.
DeFi recovery on the cards?
Solana witnessed an uptick in its DeFi activity with its TVL registering a 6% jump over the last week, data from DeFiLlama pointed out. This development came even as Solana underperformed in the month of February, impacted by a waning interest in its ambitious meme coin, BONK.
The chain’s daily DEX trading volume also showed signs of a rebound after it more than doubled at the time of writing, plunging to a monthly low on 11 February. Despite this, the cumulative weekly volume dropped by 2.3%, highlighting the stress Solana has been in February.
What does SOL’s price say?
SOL has come out of the FTX-induced negativity to a great extent in 2023. According to data from CoinMarketCap, the token locked gains of 112% since the start of 2023. Of late, the price has exhibited higher volatility with wild inter-day swings. At press time, it was valued at $22.99 with a 1.69% jump from the previous day.
Data from Santiment complimented the above claim. The price volatility steadily increased over the past week, which placed the weighted sentiment in negative territory. High volatility could have prompted risk-averse traders to stay away from trading the coin.
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The transaction volume, which recorded a nearly 60% month-over-month drop, was a testament to the declining investor’s sentiment.
Solana’s Open Interest (OI) steadily declined over the last 30 days, data from Coinalyze pointed out. A decline in Open Interest signals reduced trading activity and market interest for the coin. With the OI forming a bearish divergence, SOL’s price could face further downsides in the short term.
In the DeFi (Decentralized Finance) space, the rise of SOL token has been nothing short of remarkable. In the last few months, SOL has seen a wave of adoption as well as numerous developments, leading it to become one of the most prominent assets in the DeFi landscape.
The strength of SOL lies in its unique feature: its ability to offer locking parabolic curves. Parabolic curves enable users to lock up their tokens in order to receive inflation on the tokens. This has allowed SOL to stand out from the rest of the DeFi range, creating a dynamic and attractive offering for users.
However, there are still testing times ahead for SOL. Despite its impressive performance over the last few months, there has been some volatility as the DeFi market has been subject to regulatory scrutiny. Ethereum’s ‘gas’ fees have also skyrocketed, making it increasingly expensive to use DeFi services. This has put pressure on SOL users, reducing liquidity and making it more challenging for users to make profits from their token holdings.
But, the SOL team is not taking these developments lying down. It has released several updates to its platform, including the introduction of a token burning protocol to reduce gas costs and a staking incentive program as a way of improving liquidity. It is also exploring new avenues, including providing liquidity to other blockchains, in order to further expand its reach.
Overall, these measures have been effective in reaffirming SOL’s position in the DeFi landscape. While there will surely remain testing times ahead, SOL appears well-positioned to take advantage of the potential of DeFi as the market continues to mature and mature.