Key takeaways:
- SOL’s rebound to $72 shows a bullish future and airdrop hopes, but falling TVL and low DEX volumes point to breakable onchain demand.
- Tokenized shares are generating buzz around Solana, but dependence on Pump.fun and competition from Hyperliquid threaten to maintain SOL’s momentum.
Solana’s native token SOL jumped to $72 on Friday, distancing itself from the previous day’s lows of $64. Some of traders’ optimism stemmed from a surge in trading in tokenized stocks, driven by the artificial intelligence sector. However, increasing competition in decentralized application networks may limit the short-term benefits of SOL.
Solana tokenized shares 24-hour volumes, USD. Source: Jupiter Aggregator
Solana’s tokenized shares traded over $113 million in 24 hours, according to Jupiter Aggregator data. However, the relatively low liquidity in automated market-making pools has raised concerns, especially as many issuers compete for similar products. Still, some of these tokens have only recently been launched, which may explain the low number of holders in most cases.
Blockchains Ranked by DeFi Total Value Locked (TVL), USD. source: DefiLlama
The total value locked (TVL) on the Solana network has declined by 11% over the past month, while Ethereum’s Layer 2 base has narrowed the gap. Negative developments on Solana TVL include a 19% decline by Kamino, a 20% decline by Binance Staked SOL, and a 17% decline by Raydium. In turn, the xStocks tokenization platform recorded a 31% augment in TVL.
Weekly DEX volumes and DApps revenue in Solana, USD. source: DefiLlama
Decentralized currency exchange (DEX) volume on Solana dropped to $10 billion per week from $30 billion in early February, coinciding with a decline in decentralized application (DApp) revenue. So, regardless of the successful launch of tokenized tech stocks and equity indices, demand for SOL for blockchain processing remains confined.
Solana’s dependence on Pump.fun and increased competition for tokenized launches
What’s more disturbing is that 30% of DApp revenues on Solana comes from the Pump.fun token launch platform, which depends heavily on memecoin activity. CoinGecko report revealed that 80% of the 18.7 million tokens launched in less than 48 hours, while 55% of the addresses involved lost up to $1,000, according to Dune data.
SOL Perpetual Futures Annual Funding Rate. Source: Lightness
Demand for bullish leverage on SOL futures increased on Friday, pushing the funding rate to its highest level in June. The current level of 10% is far from overconfident, as the range of 6% to 12% is usually considered neutral. Still, the 14% gain from Thursday’s low of $64 managed to reverse a bearish trend characterized by negative financing rates.
Related: Solana captures 95% of tokenized capital while investors debate whether SOL has hit rock bottom
Some of SOL investors’ optimism stems from the expectation of network airdrops, although the timing of these tokens’ launch remains uncertain. Highlights include reinsurance OnRe with $200 million in TVL, Bulk Perpetual DEX with $325 million in total open interest, and lending platform Loopscale with $79 million in TVL.
It may be premature to claim that SOL is committed to reclaiming the $80 mark last seen on June 1, given increased competition in tokenized stock trading from Hyperliquid and centralized exchanges on competing blockchains. OKX, for example, established the company a strategic partnership with NYSE parent company using Ethereum-based systems.
