- Solana’s TVL as of 31 May stood nowhere close to its all-time high of $10.03 billion in 2021.
- However, Solana’s activity on the NFT front could be considered a highlight for the blockchain
Solana’s performance has been quite the mixed bag lately and underwhelming considering that it was seen as the Ethereum [ETH] killer at some point. Its performance in DeFi has particularly been subpar and this was particularly evident from its TVL.
Solana’s TVL has achieved very little growth so far this year. Its current figure ($268.94 million) was a far cry from its $10.03 billion historic high in November 2021. Most top PoS networks such as Cardano [ADA] and Ethereum have seen significant TVL gains within the last few months.
Source: DeFiLlama
A recent Messari analysis revealed that one of the main reasons for the lackluster TVL performance was the focus on consumer applications. Its focus has been shifting away from DeFi protocols and this may explain why its TVL has been on the decline.
2/ Despite the decline in on-chain liquidity, @Solana's developer ecosystem has shown resilience.
They have been actively building new functionalities, especially in the consumer sector, including programmable #NFTs and compressed NFTs.
— Messari (@MessariCrypto) May 31, 2023
A heavy focus on DeFi could also be one of the paths that blockchain networks use to attract and maintain healthy user growth. The Messari report revealed that Solana has been onboarding users through its focus on consumer applications but has been struggling to retain users.
A worthy change of tactic?
The report also noted that the failure to sustain users may not necessarily be due to the shift away from DeFi. Messari proposed that Solana may achieve more success in user retention by creating more compelling applications that offer a more attractive user experience. Nevertheless, this particular focus may not favor its TVL growth but it is off to a healthy start.
Solana’s focus on user applications underscores the robust untapped global potential which may eventually balloon in the future. It was already seeing growth in some key areas as a result of this focus. For example, the network sustained robust development activity associated with consumer applications.
2/ Despite the decline in on-chain liquidity, @Solana's developer ecosystem has shown resilience.
They have been actively building new functionalities, especially in the consumer sector, including programmable #NFTs and compressed NFTs.
— Messari (@MessariCrypto) May 31, 2023
On-chain data validated this observation. Solana maintained energetic development activity during the last four weeks.
Source: Santiment
Another interesting finding regarding Solana’s focus on the consumer segment was that it shifted focus to a major area that attracts individual consumers at the blockchain scale. The Ethereum killer shifted its focus to NFTs trading activity according to the Messari report.
How many are 1,10,100 SOLs worth today
The NFT trading activity in question registered positively on Solana’s total NFT trades volume metric. The network kicked off the year with low NFT activity from January to mid-March. However, NFT activity on Solana exploded from the second half of March to the end of May.
Source: Santiment
Considering the above findings, we can see that the consumer applications segment is off to a busy start. The fact that the market is still in the early stages of adoption means there is a lot of room to grow. Nevertheless, it is still too early to determine if it was worth deviating from DeFi.
