- Solana’s DeFi ecosystem sees a 12% decline in TVL amid low user engagement.
- SOL’s price struggles with bearish momentum, threatening further losses below key support levels.
Solana [SOL] is experiencing a significant downturn as its TVL has dropped to its lowest point this month. Over $1 billion has been withdrawn from Solana’s DeFi ecosystem since the beginning of December, signaling a sharp decline in activity on the Layer-1 network.
This drop in TVL reflects a broader trend of reduced user engagement, with daily active addresses on the network also seeing a noticeable decline.
As a result, Solana’s once-promising DeFi landscape now faces mounting challenges, raising questions about its future prospects.
Solana faces steep decline in TVL
Solana’s TVL has dropped to $8.01 billion as of December 2024, reflecting a 12% decrease since the start of the month. This translates to $1.1 billion exiting the ecosystem.
Jito, the leading DeFi protocol on Solana, has experienced a significant decline, with its TVL falling by 28% over the past month, now standing at $2.66 billion.
Source: DefiLlama
This sharp decrease in TVL is indicative of a broader trend of reduced activity on the Solana network, as users continue to pull out funds.
The drop in TVL and Jito’s struggles highlight ongoing challenges for Solana’s DeFi space, raising questions about the network’s future growth amidst declining engagement.
Declining user activity and revenue contribute to Solana’s struggles
Solana’s decline in TVL is mirrored by a broader drop in user activity. User engagement has decreased since December 1, with 5.37 million unique addresses completing at least one transaction in the past 21 days – marking a 7% drop in activity.
This reduced usage has impacted Solana’s network revenue, which has fallen by 24% since the start of December.
Source: The Block
Additionally, Solana’s native token, SOL, has seen a significant 28% decrease in value over the past 30 days. These combined factors highlight ongoing challenges for Solana, with both user engagement and financial performance showing signs of continued strain.
Read Solana [SOL] Price Prediction 2024-2025
SOL price under pressure amid bearish momentum
SOL is trading at $182.08 at press time, reflecting a 2.11% decline in the past four hours. The RSI is at 40.65, hovering near oversold territory, suggesting weakened buying momentum.
OBV indicates diminishing accumulation, aligning with declining price activity. A breakdown below $180 could open the door to further losses, targeting $175 as the next key support.
Source: TradingView
Conversely, recovery requires a close above $190, aligning with the 21-day EMA. Macro sentiment remains bearish, with lower highs persisting on the chart.
Traders should watch for volume spikes as indicators of a potential reversal or continuation of the downtrend.
