Solana (SOL) Sees Drop In NFT & DeFi Usage

Is Solana summer over? Seasonality might suggest so, but if that’s enough for you, the blockchains usage across both defi and NFT landscapes has been falling recently. Competing chains are making targeted and dedicated efforts to get more involved in both defi and NFTs, leading to major growth and investment in the space at large.
Let’s take a brief look at what the numbers are reflecting, why this might be the case, and where we go from here.
The DeFi Nosedive
According to DefiLlama TVL data, Solana has slumped down to the #8 slot in total TVL, roughly a third lower than a month ago and over ten percent lower than just a week ago. At peak bull market season late last year, Solana’s defi TVL amassed to north of $10B – but today sits at less than $1B, with over a quarter of Solana’s TVL living within lending platform Solend.
TVL is highly impacted by underlying asset prices (so as the price of SOL or any other digital asset declines or rises, so too does protocols TVL), so generally all blockchains have seen a descent in TVL throughout defi as the market has been in bear mode this year.
Solana’s descent, however, has been certainly at a higher clip than competitors, and the chain is in serious danger to falling out of the top 10 in defi TVL. It didn’t help to have the $100M+ exploit of Mango Markets in recent weeks, which concluded with a bug bounty that drained the protocol but reimbursed retail investors.

It isn’t all ‘doom and gloom’ for Solana, however, as there are plenty of opportunities for growth and development beyond defi. However, the picture around NFTs doesn’t seem too much brighter either.

Solana (SOL) has seen hits to its defi and NFT push, but still stands strong. | Source: SOL-USD on TradingView.com

NFTs: Solana Falling Out Of The #2 Spot?
Solana has long been considered the de facto #2 in all things NFTs behind Ethereum. Could their positioning be at risk? Never say never, but the NFT ecosystem at large continues to grow and so too does the threat to Solana’s positioning.
At one point over the weekend, data aggregator CryptoSlam displayed that Solana had fallen to the #3 spot:
And for the first time in over a year, Solana is not #2 in NFT sales volume behind Ethereum pic.twitter.com/hESVKd2Jam
— Mamba 🐍 (@Mamba248x) October 23, 2022

Mamba elaborated that this data was arguably inaccurate as it was not allocating Magic Eden data appropriately. Even if we take wash trading out of the picture across all blockchains (a factor that often complicates metrics and makes data more muddy), and even if we assume that Solana is firmly positioned as the #2 in NFTs, it’s indisputable that there are competing chains that are on the attacking front.
Newly-formed Aptos blockchain, and more “legacy chains” (relatively speaking) like Cardano, Avalanche, Hedera, and even Ripple have been making firm strides in NFT investment and community building. These chains are certainly not at Solana’s level – but they are threats that are certainly on any NFT aficionado’s radar.