Gradual Falling of Solana DeFi
It is known to people associated with the crypto industry that Solana DeFi isn’t the same as it was prior to the crypto economy collapse.
Solana’s cryptocurrencies namely SOL was among the top 10 cryptocurrencies in the world. In fact, the currency’s value was surging so rapidly that not even Bitcoin and Ethereum could come close to it.
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However, SOL could not be blamed for its downfall which was due to the global crypto industry’s collapse.
The impact of the crypto industry’s collapse could also evidently be seen in the Solana DeFi project wherein the total value locked (TVL) was falling gradually.
Unfortunately, the FTX’s fiasco has currently accelerated the rapid fall in the TVL of Solana DeFi.
95% Shrinkage in TVL since December 2021
As of Monday the 14th of November 2022, SOL’s TVL was recorded at about US$ 330 Million. If one goes back to December 2021, then the same TVL was standing tall at its all-time best value exceeding US$ 10 Billion.
The fact that Solana DeFi’s TVL was over US$ 10 Billion in December past year was also verified from the data published by DeFiLlama.
Since the beginning of 2022, Solana’s TVL has been going down consistently which was primarily because SOL was losing value due to a market meltdown.
Year-to-date Solana has witnessed its TVL shrink to an alarming level of 95%.
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Most recently, at the end of last week, a further 63.21% decrease in the TVL was recorded by the DeFi network.
Shrinkage Accelerated By FTX
On the other hand, FTX’s liquidity crisis is something to blame for because of this Solana’s TVL has now been rapidly and frequently shrinking.
It wouldn’t be wrong to suggest that one of Solana network’s biggest proponents was FTX’s former CEO, Sam Bankman-Fried.
The former CEO of FTX had several times made public comments in which he could be seen advocating for the Solana Network. However, Bankman-Fried has recently left FTX and has been facing corruption charges.
One way or the other, Solana Network has been seriously affected indirectly by FTX and the allegations of corruption against FTX’s former CEO.
It is also true that Solana Foundation had deposited assets amounting to more than US$ 30 Million with FTX. These assets are still in the custody of FTX.
The current situation is that Solana Foundation has been denying any influences from FTX. It has in fact claimed that all of its DeFi projects either have limited or no exposure at all with the FTX.
However, the Foundation has acknowledged that several of its DeFi projects have directly or indirectly been affected by FTX but not all.
Since last week, Solana’s TVL has seen $500 Million going out of DeFi projects which has detonated an alarming situation within the network.