The total value locked (TVL) on the Solana network has fallen to its lowest level this month, reflecting a decline in activity on the layer-one network. Since the beginning of the month, more than $1 billion has been withdrawn from the Solana decentralized finance (DeFi) ecosystem.
The sharp drop in TVL can be attributed to a decrease in daily active addresses on the network. This indicates a shrinking user base and reduced on-chain activity.
Solana Network TVL Drops Amid Low Activity
According to DeFiLlama, Solana’s total value locked (TVL) is currently at $8.01 billion, down 12% since December 1, equating to $1.1 billion exiting the ecosystem. The network’s leading DeFi protocol, Jito, has been hit particularly hard, recording a 28% drop in TVL over the past month. At the time of writing, Jito’s TVL is at $2.66 billion.
Solana’s TVL decline reflects the broader decline in usage over the period under review. According to Artemis, user activity on Solana has been on a downward trend since the beginning of the month. Over the past 21 days, 5.37 million unique addresses have completed at least one transaction on L1, indicating a 7% decline in on-chain activity.
Furthermore, due to the low usage of Solana, the network’s revenue has also decreased. This decline has been exacerbated by the performance of SOL, which has dropped by 28% in the past 30 days. According to Artemis data, the network’s revenue has fallen by 24% since the beginning of December.
SOL Price Forecast: Change in Market Sentiment Could Reverse Bearish Trend
An evaluation of the daily chart of SOL/USD revealed a negative Chaikin money flow, which confirms the low demand for it. At the time of writing, this indicator is at -0.04.
The CMF of an asset measures its accumulation or distribution over a specified period, combining price and volume data. When the CMF value is negative, it indicates greater distribution in the market (selling pressure) than accumulation (buying pressure), hinting at a continued decline in price. If Solana’s sell-off continues, its price could drop to $168.83.
However, this bearish outlook will be invalidated if the market sentiment changes from negative to positive and buying activity resumes. In that case, Solana price will break the resistance at $187 and attempt to rise above $200.
