Solana’s 54% TVL Plunge Leads DeFi Decline

TVL is easily affected by market conditions, so the carnage left by FTX’s wake could be to blame

article-image

Blockworks exclusive art by axel rangel

share

The total value locked (TVL) across major DeFi protocols — as well as related smart contracts — has dipped outside the bounds of typical volatility since the collapse of FTX.

Though the declines so far have not been jarring on an absolute basis, data compiled by DeFiLlama illustrates how FTX’s speedy demise has started to spread from competing centralized exchanges into decentralized markets. 

Over the past seven days, MakerDAO, one of the most prominent DeFi lending protocols, has seen its TVL dip by 3.11%, per the data. Liquid staking protocol Lido, meanwhile, booked a 2% decline over the same period — and open source liquidity protocol AAVE’s TVL was down 4.7% by noon Wednesday in New York. 

TVL represents assets staked on a smart contract, indicating funding available to a protocol to carry out market functions, including spending, borrowing and facilitating transactions.

More broadly, Ethereum had its TVL drop by 14.84% in the last seven days. Despite Polygon’s MATIC token (ERC-20) remaining steady, the blockchain’s TVL dropped 10.8%. Most significantly, however, is the Solana network — the TVL ​​of which plummeted by 54.2%.

Solana was heavily promoted by former FTX CEO Sam Bankman-Fried, and its decline accelerated after FTX’s liquidity issues surfaced last week.

The Solana Foundation said that it had roughly $1 million in cash or cash equivalents on FTX — less than 1% of liquid assets on hand. The accounting comprises roughly $3.2 million worth of shares in FTX stocks, $3.4 million of the exchange’s native FTT tokens and $134.5 million in decentralized exchange Serum’s utility token — SRM, an asset that enables holders to receive up to a 50% discount on their trading fees. 

Several DeFi projects on Solana were also affected by the FTX contagion. Most notably, lending protocol Solend saw its TVL drop by 63.21% in the past week, its current TVL at the time of writing sits at $24.87 million.

It is important to note, however, that TVL is easily affected by market conditions and inflates when assets increase in value, Amberdata CEO Shawn Douglass said in a blog post. Other market metrics, as such, may be more apt in terms of evaluating the health of DeFi protocols and associated projects.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

recent research

Flashnote Template (3).png

Research

MetaDAO offers a platform for DAOs to engage in futarchy, using conditional markets and profit incentives for improved decision-making. Conditional markets allow market participants to speculate on whether or not the passage of a proposal will increase a token’s market value. By crowdsourcing information from market actors, DAOs can utilize futarchy to identify decisions that will be most beneficial for their token’s market price. MetaDAO as an organization is explicitly engaged in decision-making on the criteria that market participants believe a decision will be accretive to the price of the META token.

article-image

Meanwhile, Euler returns with a V2 launch of its lending protocol

article-image

Two bitcoin mining-focused companies introduce new leaders to their director boards as they prep for the segment’s evolution

article-image

A fund co-founded by Alan Howard’s son and 10T veterans launched alongside a generalist fund with Notation Capital co-founder Nick Chirls as a general partner

article-image

Making sense of the jobs report that didn’t necessarily clear up what size of rate cut the Fed could opt for

article-image

Plus, India really showed out for Colosseum’s Radar hackathon

article-image

The offering, which launched in October 2023, had gathered just $21 million in assets