Solana TVL and price drop 50%+ from ATH, but gaming DApps could turn the tables


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2022 has not been a very good begin for cryptocurrencies. So far, the whole market capitalization has dropped by 21% to $1.77 trillion. Solana‘s (SOL) correction has been much more brutal, presenting a 48.5% correction year-to-date.

Solana (blue) vs. Ether (orange), AVAX (purple), BNB (yellow). Supply: TradingView

Solana leads the staking charts with $35 billion in worth locked, which is equal to 74% of the SOL tokens in circulation. A number of causes may be recognized for the underperformance together with four network outages in late 2021 and early 2022.

The newest incident on Jan. 7 was attributed to a distributed denial-of-service (DDoS) assault, inflicting Solana Lab builders to replace the code and consequently reject all these requests.

Nevertheless, traders are extra involved in regards to the centralization brought on by the prices of being a Solana validator. To attain 400 millisecond block occasions, the really useful {hardware} includes a 12 core 2.8GHz CPU, 256 GB reminiscence, high-speed 1 TB SSD drives and a low-latency web connection.

DApp use is on the decline

Solana‘s major decentralized software (DApp) metric began to show weak spot earlier in November after the community‘s whole worth locked (TVL) started to linger at $15 billion.

Solana community Whole Worth Locked, USD. Supply: DefiLlama

The chart above reveals how Solana‘s DApp deposits noticed a 50% lower in three months because the indicator reached its lowest degree since Sept. 8. As a comparability, Fantom‘s TVL at present stands at $9.5 billion after doubling in three months. One other DApp scaling resolution competitor, Terra, noticed an 87% TVL hike to $23.2 billion.

On the brilliant facet, on Feb. 21, FTX.US, the American arm of the worldwide crypto spinoff and spot trade FTX, introduced a new blockchain gaming unit. It’s also price noting that Solana Ventures partnered with FTX and Lightspeed Enterprise on Nov. 5 to launch a $100 million fund dedicated to the sector.

To substantiate whether or not this drop in TVL must be regarding, one ought to analyze DApp utilization metrics. Some DApps should not financially intensive, so the worth deposited is irrelevant.

Solana DApps 30-day on-chain knowledge. Supply: DappRadar

As proven by DappRadar knowledge, on Jan. 28 the variety of Solana community addresses interacting with decentralized purposes dropped by 18% on common. The one optimistic change was Solend, an algorithmic lending protocol.

The decreased curiosity in Solana DApps was additionally mirrored in its futures open curiosity, which peaked at $2 billion on Nov. 6 and was just lately hit with a steep correction.

The gaming sector might be a shock issue

Though Solana has been hit the toughest in comparison with comparable sensible contract platforms, there’s strong community use on nonfungible tokens (NFT) marketplaces, as measured by Magic Eden‘s 178,820 energetic addresses within the final 30 days.

Furthermore, Solana Ventures‘ wager on the gaming sector might additional showcase the community’s processing capability. For example, video games symbolize half of the highest 10 DApps throughout each blockchain covered by DappRadar. That features Splinterlands which has 578,280 energetic addresses and Alien Worlds which has 544,900.

The above knowledge counsel that Solana is shedding floor versus competing chains, however holders should not involved as a result of 74% of the cash are nonetheless locked in staking. So long as Solana Labs‘ partnerships and investments proceed to point out potential, there’s little motive to be bearish on SOL.

The views and opinions expressed listed below are solely these of the author and don’t essentially replicate the views of Cointelegraph. Each funding and buying and selling transfer entails threat. It’s best to conduct your personal analysis when making a call.