Daily trading volume on Solana reaches an impressive $5.84 billion, yet its token SOL experiences a 6% drop - what could be the next move?
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Solana, the fast-growing blockchain network, has experienced higher inflows during the recent market correction, primarily due to substantial institutional capital investment, active bridging of assets, and robust decentralized application (dApp) activity on its network.
Key factors contributing to Solana's success include:
Institutional Inflows
In 2021, Solana has attracted over $1.7 billion in institutional investments. Public companies like Upexi have made sizeable SOL purchases, such as the $320 million acquisition of 1.7 million SOL. Institutional products like ETFs and ETPs have been major capital conduits, with the $316 million REX-Osprey ETF being a notable example. Ongoing regulatory progress towards ETF approvals is enhancing confidence and inflows.
Bridging and Asset Flows
Solana benefits from substantial asset bridging activity, facilitating liquidity inflows even amid market downturns. These bridges enable the movement of USDC and other tokens on-chain, with $24 billion USDC liquidity presently on Solana’s network. This fosters institutional trading and real-world asset (RWA) tokenization growth, led by partnerships with firms like BlackRock and Apollo.
dApps and Network Activity
Solana's ecosystem boasts over 6 million daily active addresses and developer growth exceeding 400%, reflecting vibrant dApp engagement in DeFi and beyond. The network leads in revenue generation for 22 consecutive weeks, with high throughput (65,000 TPS) and low latency (100 ms finality) attracting projects such as SpaceX and Stripe implementations.
The main revenue drivers on the Solana network include platforms like Jupiter, Raydium, LetsBONKfun, and Pump.fun. Pump.fun generated $10 million, and the total for all dApps was $35 million on Solana. Circle minted over $1.25 billion USDC on the Solana network, increasing the total on the network to $24 billion.
Solana's outlook remains bullish, and the inflows could be a signal that another price surge is building up. Despite a 6% decline in the past 24 hours, Solana has been up on a weekly timeframe scale. The daily volume for Solana was at $5.84 billion, up by 58% at the time of writing. The total assets under management on the Solana blockchain reached $2.84 billion.
However, Solana continues to face backlash due to its wide acquisition by venture capital firms, which some critics argue could lead to centralization concerns. Despite this, the confluence of institutional adoption, liquidity via bridging, and strong dApp ecosystem growth differentiates Solana from its peers during this correction, resulting in higher inflows despite broader market weakness.
This institutional flywheel effect, supported by staking yield offerings (~7%), a growing validator network (100+ data centers), and technical upgrades like Alpenglow, positions Solana as a foundational blockchain for decentralized finance and global payments, driving capital inflows beyond speculative trading.
[1] Solana Foundation Blog Post [2] CoinDesk Article [3] The Block Article [4] Cointelegraph Article [5] SEC Filing
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