- Solana’s DeFi activity took a beating as BONK token dropped in value.
- However, its NFT performance was a silver lining.
Solana [SOL] witnessed a considerable fall in its decentralized finance (DeFi) activity in the month of February. As per data from DeFiLlama, the total value locked (TVL) on the network remained flat for the most part of February before dipping below $250 million.
Source: DeFiLlama
And that’s not all. The total volume of all decentralized exchanges (DEXes) on the Solana chain has progressively reduced with each passing week.
At press time, the cumulative volume over the last seven days stood at just over $280 million, indicating a near 20% week-on-week (WoW) drop.
Source: DeFiLlama
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The ‘joke’ is over?
The launch of the dog-themed token Bonk [BONK] in December last year reinvigorated the Solana ecosystem.
As part of the marketing strategy, half of the 100 trillion token supply was airdropped for free to the community, including builders and NFT creators. This created massive hype for the meme coin, resurrecting Solana’s activity in the process.
However, with the drop in key metrics of BONK, Solana felt the pinch. Consider this- BONK has shed its value by almost 25% over the last seven days, per data from CoinMarketCap.
Its daily active users and the number of transactions have been on a continuous decline, data from Dune Analytics revealed.
Source: Dune Analytics
Initially, Solana-based DEX like Orca attracted great volume for trading pairs involving BONK. But with the drop in BONK’s value, it has seen its volume decline. This explains Solana’s drop in DEX trading volume highlighted previously.
Solana suffers from negative sentiment
As BONK dropped in value and hype, the sentiment for SOL went into negative territory as well, highlighted by the weighted sentiment metric from Santiment.
However, its performance on the NFT front kept the ecosystem running. The daily trading volume hit the $1 million mark quite frequently in February, which was fueled by new launches.
Source: Santiment
Furthermore, SOL’s price fell by more than 10% over the past seven days, as per CoinMarketCap. The support at $20.85 was broken on 10 February but the token has started to move northward and was up 3.46% at press time.
Increased selling activity dragged the Relative Strength Index (RSI) below neutral 50. However, the dip was not strong enough to make bearish predictions.
The On Balance Volume (OBV) started an upward trajectory, implying that buying activity could pick up.
Source: TradingView SOL/USD
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The whole episode reaffirms the volatile nature of meme coins which are built on hype and perception rather than any technology or underlying fundamentals.