Original author: Marcel Pechman

Original title: Solana TVL hits near 1-year high — Will SOL price follow?

Original source: Cointelegraph

Compiled by: Koala, Mars Finance

Solana’s Total Value Locked Surges, But Is It Enough to Drive SOL Price to New Highs?

Solana’s native token, SOL (currently priced at $154), has failed to break through the $150 resistance level since August 12. However, some network indicators show strong performance, including that total deposits in decentralized applications have surged to their highest level since October 2022. Traders are now beginning to question whether these improvements in network fundamentals are enough to push the price of SOL back to $190, and what factors may be hindering its performance.

Solana Spot ETF’s Prospects Are Grim in the U.S.

One reason for the lack of enthusiasm among investors is Cboe Global Markets’ recent decision to remove the Form 19b-4 for the Solana cash exchange-traded fund (ETF) from its website on August 16. Some market participants, including financial attorney Scott Johnsson, believe the SEC has informally rejected the Solana ETF, in line with Chairman Gary Gensler’s earlier position.

Eric Balchunas, senior ETF analyst at Bloomberg, shared a similar view, noting that while the S-1 filings of ETF issuers are still valid, the chances of approval are slim, and the only hope is that the current SEC administration will change if Donald Trump wins the U.S. presidential election. As a result, investor optimism about the potential launch of a spot Solana ETF has diminished, reducing the direct impact on Solana network metrics.

For example, cryptocurrency trader and investor CoinMamba believes that Solana’s appeal has waned as average Ethereum fees have fallen to around $1 for the first time since July 2020, while other blockchains have gained traction through the launch of memecoin, which has been a significant driver of demand for SOL tokens.

CoinMamba also said that Solana needs to “find a new narrative,” suggesting that the prospects for SOL’s price appreciation depend on exploring new niches and discovering decentralized applications (DApps) that can provide a competitive advantage. However, this analysis ignores the fact that the issuance of the stablecoin PayPal USD (PYUSD) issued on the Solana network has reached $620 million, despite being less than three months old since its launch in May 2024.

Additionally, there are multiple projects under development on Solana, many of which have received millions of dollars in funding from experienced venture capitalists. For example, Colosseum, a company that manages the Solana hackathon program, received $60 million in funding to accelerate the development of the ecosystem, and the Decentralized Autonomous Wireless Network (DAWN), a decentralized broadband initiative that recently raised $18 million.

Solana TVL growth is not accompanied by higher activity

While success is not a foregone conclusion, the growth of the Solana ecosystem is undeniable, as evidenced by the increasing total value locked (TVL) on the network, which suggests that SOL's price still has room to rise. On August 22, Solana network DApps held a total of 34.9 million SOL, the highest level since October 2022 and up 13.7% from the previous month.

Solana Total Value Locked (TVL), SOL. Source: DefiLlama

Notable highlights from the past 30 days include decentralized exchange Jupiter, which hit $1.06 billion in TVL, and lending and leverage platform Kamino, which now holds $1.48 billion in deposits. Also notable is that in USD terms, Solana’s TVL is $5 billion, surpassing its closest competitor, BNB Chain, which holds $4.5 billion.

While growth in TVL is generally a positive sign, it does not necessarily indicate an increase in user numbers or activity, as most DApps do not require a large deposit base. The number of unique active addresses interacting with these applications is the most reliable indicator of actual user numbers.

Solana’s most active Dapps in the past 30 days. Source: DappRadar

Half of Solana's top DApps have seen a decline in users over the past 30 days, with most of the growth concentrated in Raydium and the recently launched high-risk decentralized finance platform. Conversely, some previously high-profile projects such as Helio, Solend, and Marginfi each have less than 50,000 active addresses. Therefore, Solana's TVL growth alone is not enough to support a near-term SOL price increase to $190 or higher.