HomeNewsSolana's Network Activity Takes a Dive: The Why and How

Solana’s Network Activity Takes a Dive: The Why and How

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  • Solana’s daily user activity dips to its lowest since January 2023.
  • While network activity takes a hit, DeFi TVL on Solana impressively surges by over 150%.

Dissecting Solana’s User Activity Slump

Layer-1 (L1) network Solana [SOL] painted a somewhat bleak picture for August, registering just 204,000 active addresses, a number reminiscent of its January stats, as showcased by The Block’s Data Dashboard. The steady year-to-date decrease in daily active addresses for Solana stands at an unmissable 44%, with the numbers dwindling to a mere 207,820 as of 4 September.

The Catalysts Behind the Decline

Historically, Solana faced hurdles in 2022 with 11 significant and three minor network outages. These technical glitches prompted a significant chunk of its user base to migrate elsewhere. Fast forward to 2023, with only one recorded outage, it’s vital to pinpoint other plausible reasons behind this slump.

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Two major incidents come to the fore:

  1. The unforeseen implosion of FTX in November 2022.
  2. The Securities and Exchange Commission (SEC) labeling Solana’s native SOL token as a security.

Both events undeniably injected uncertainty, causing potential rifts in trust and the subsequent downturn in daily user engagement.

In August alone, Solana experienced a 16% drop in daily user activity. Mirroring this, the daily transaction count, based on Artemis’ data, sank to a low of 13.69 million by 26 August, although a correction pushed this figure up to 16.3 million by 5 September.

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This diminished activity naturally influenced the chain’s financial health. Token Terminal data reveals a 4% decline in both transaction fees and revenue over the past month for Solana.

The Silver Lining: DeFi TVL

However, not all indicators trended south. Focusing on Solana’s decentralized finance (DeFi) sector, the total value locked (TVL) has made noteworthy strides. At present, the TVL sits comfortably at $625.95 million, marking a substantial leap of over 150% since January. This growth wasn’t without its hiccups; the last month saw a slight 2% decline, as per DefiLlama’s metrics.

This TVL growth, however, hasn’t been evenly spread. Three of the top four Solana-based protocols, in terms of asset value, witnessed double-digit declines in their respective TVLs.

Lastly, SOL, Solana‘s native token, hasn’t been immune to this downturn. Its price dipped by 15% in the past 30 days, with its current rate standing at $19.81, as evidenced by CoinMarketCap data.

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Brian Johnson
Brian Johnson
A dedicated Bitcoin journalist passionate about uncovering the latest trends, developments, and innovations in the world of cryptocurrency, while delivering engaging and well-researched articles to inform and educate readers on the dynamic digital finance landscape.
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