Turmoil has engulfed the Solana blockchain ($SOL) over the past week, in a series of market events and security breaches that have taken a toll on the network’s performance.
From $SOL’s price slipping under $130 to fears surrounding FTX unlocks and a record-breaking hack at Bybit, the crypto market has taken another hit. And if we analyze the state of Solana’s ecosystem this week, it seems clear that macro pressures, security concerns, and investor sentiment are combining into quite a potent cocktail.
Solana’s Struggles Amid Market Chaos
The downturn of the market has reverberated through the crypto world, and Solana ($SOL) is not immune. In the last week, $SOL has taken a 19% hit to its value, plummeting to $135. Its market cap has mirrored that downward trajectory. It now sits with a market cap of $68.46 billion. And the Total Value Locked (TVL) in liquidity across Solana’s DeFi ecosystem has dropped to $7.3 billion, with a noticeable downward trend.
User activity on Solana is also taking a hit. The number of daily active addresses on the network has decreased to 4.1 million, reflecting a drop in the number of folks engaging with the network.
Crypto investors are growing more cautious and are less inclined to speculate on the sorts of activities that would drive the network’s daily numbers up. Meanwhile, things are getting a lot more serious for Solana when it comes to decentralized exchanges (DEXs): DEX volume on the network just experienced a massive 31% drop and now sits at a stark $17.25 billion. This alarming decrease in DEX activity not only suggests that Solana’s DEXs are becoming much less liquid, but also highlights the DeFi downturn and suggests that DEX activity on Solana is at serious risk.
A Week of Market-wide Chaos
The wider cryptocurrency market has suffered from extreme uncertainty, with $100 billion being erased from it in the span of just one hour. Bitcoin ($BTC) registered a sharp downward move, losing its all-important $90K support, and taking the rest of the market down with it. Many altcoins have also been feeling the downturn, with most crypto tokens bleeding red across the board. And all this has seen the crypto fear and greed index plummet to 29, which signals that the market is in a state of extreme fear.
One of the most notable occurrences this week was Bybit’s biggest hack to date, with $1.4 billion worth of Ethereum ($ETH) being taken. The hack, thought to be the handiwork of the Lazarus Group, has added to the tension in the markets, making investors even more risk-averse. This has put the network effects that should be propping up blockchain ecosystems like Solana under even more pressure, and with that reduced confidence in the tokens and the ecosystems themselves.
Solana’s Ecosystem Health Under Scrutiny
Although the Solana ecosystem is under some strain, the RAY price drop isn’t an indication Solana is about to fall apart.
If we look back, the Solana price was also under pressure during the same time as RAY. So in general, the Solana ecosystem was feeling a strain. But the claims in the latest reports and articles seem to indicate that Solana is about to “catch the FTX drop,” as some in the crypto space like to say.
In looking for a reason RAY, the price, and the Solana ecosystem, in general, are under pressure, it’s also worth examining what was also going on with Solana over the same time period.
Tokens for other big names in DeFi have also declined sharply, with Aave ($AAVE) down 21%, Chainlink ($LINK) down 18%, and Lido ($LDO) down 24%. But not everything is doom and gloom. We do have a smattering of exceptions, like Grass ($GRASS) and Convex Finance ($CVX), that have shown upticks in value, so that’s a few positive datapoints at least in what feels like a pretty rough market.
🚀 Week in Solana: $SOL Slips to $130 Due to FTX Unlocks and Bybit Hack.
DEX volume tanks 31%!
Bybit loses $1.4B in ETH!
Wintermute sparks FTX unlock fears!Let's unpack this week in Solana 🧵
1/6 pic.twitter.com/WUsWzKrQqw
— CoinMarketCap (@CoinMarketCap) February 26, 2025
This week, one of the most pressing concerns for Solana is that user activity is declining, and it has dropped by a hefty 40% across the board. Of course, this decline in engagement isn’t exactly a future-facing signal, and it suggests that Solana is either at risk of having users leave the network or at risk of having users scale back their participation.
Key Events and Fears Surrounding FTX Unlocks
Besides the broader market problems, particular occurrences have fed Solana’s ongoing difficulties. Wintermute, a notable market-making firm, pulled out $38 million in $SOL from Binance just before the FTX token unlocks, which was really bad timing and likely not a good sign for market liquidity. The unlocks will put large amounts of not just Solana but also other assets back into circulation, which many fear will exacerbate market turbulence and push the $SOL price down even more.
In more uplifting news, Time(.)fun, a platform that previously found success on Base, has now debuted on Solana, which could mean new users and new capital for the network. Even so, this is a vulnerable time, and the community is understandably on edge as the ecosystem works its way through these market difficulties.
Finally, Berachain, a rival of Solana, has made substantial strides. Its total value locked (TVL) shot up 12% to $3.37 billion, even as Solana was taking a nosedive. Berachain’s TVL rising so significantly and so quickly in the middle of Solana’s downturn is just another marker for how fierce the competition is between Solana and Berachain in the blockchain space.
Looking Forward: Solana’s Road to Recovery
Solana has faced a tough week, with a number of factors stacking up against it and leading to some network troubles. But is this downturn a downward spiral for Solana? Some think not. They bring up the very real point that Solana is still, and for the forseeable [sic] future, going to be a fast and cheap blockchain that is developing a very vibrant ecosystem.
Solana’s community is targeting three key areas in its effort to solve these problems and push the network into a new, more secure phase: security, developer growth, and DeFi/NFT ecosystem expansion.
“Solana is targeting three things that it thinks are pretty critical to the network’s problems, which are security, developer growth, and its ecosystem — meaning DeFi and NFTs,” said Andresen. “Those are areas in which Solana is hiring right now. And it also has a pretty large user base and established infrastructure, which are things that not every blockchain has.”
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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