Will the collapse of Solana activity push SOL prices further south

Solana is suffering as activity has fallen following the FTX collapse. Its original asset, SOL, also looks extremely weak at the moment.

On December 15, DeFi and web3 research firm Yield App Labs reported on the sorry state of the Solana network.

“Despite the community showing resilience, the network itself is struggling,” it said. The previously mentioned ‘Ethereum killer’ is now practically dead in terms of on-chain activity.

It added that the daily number of moves on the chain for Solana is down a whopping 98.8%.

Volume on the chain averaged around $65 billion per day in early September. It has now dropped to a daily average of just $742 million per day, according to data from The Block.

Slumping Solana statistics

In addition, daily Solana transactions have decreased from around 35 million in September to around 18 million today. Transactions have dropped almost 50% in just three months. In comparison, Ethereum transactions have fallen by about 16% in the same period.

Furthermore, daily active wallets on the chain are down 59%, the report added. Solana averaged about 852,000 daily active wallets at the beginning of September, and that number has dropped to about 364,000 active wallets. In addition, new daily addresses on the network have almost halved over the past couple of months.

Decentralized finance (DeFi) on Solana is also a dead duck. The total value locked up has crashed from $1.4 billion to around $400 million since the beginning of September. The 70% decline has contributed to TVL’s epic crash of $10 billion in November 2021, according to DeFiLlama.

Yield App Labs concluded that developer retention concerns are increasing:

“There are concerns about Solana’s long-term competitiveness on a technical level, and there are concerns about whether the development and user communities will choose to remain on Solana in the coming months and years of the bear market following the FTX fiasco.”

It added that removing the FTX and Alameda baggage could result in a more decentralized and fair network.

Price outlook

Solana’s original coin has been merged with the network. SOL lost 2% on the day and was hovering around the $14 level at press time.

SOL/USD 1 year – BeInCrypto

The coin has lost more than 60% since the FTX collapse in early November. Meanwhile, the rest of the crypto market has recovered a bit and entered a consolidation phase.

SOL prices are now down a whopping 94.6% from their November 2021 high of $260.

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