Solana, a high-performance blockchain known for its ability to scale and process transactions quickly, has shown a remarkable recovery in decentralized exchange (DEX) volume. The total DEX volume between January and April 2023 reached $5.46 billion, almost matching the $5.54 billion recorded from July to October 2022, prior to the FTX collapse.
The cryptocurrency ecosystem was shaken when FTX, a leading cryptocurrency exchange, collapsed in November 2022. The fallout from the incident severely impacted Solana, which was closely associated with Sam Bankman-Fried, the FTX founder and Solana backer. Consequently, Solana's on-chain activity plummeted, and its active wallets declined by 60% over three months.
Token accounts on Solana followed a similar pattern, dropping by nearly 60% in the same period. Furthermore, the number of newly minted SPL tokens, the fungible tokens based on the Solana Program Library, fell by over 80%. NFT activity also saw a decline, with daily volume dropping from 30,000 new NFTs in January to under 10,000 by mid-April.
Solana's DeFi ecosystem also suffered, with the total value locked (TVL) in Solana DeFi plummeting to $271 million, a 97.5% decrease from its all-time high of $10 billion in November 2021. The decline in Solana DeFi was more significant than the 70% drop experienced by the entire DeFi ecosystem during the same period.
Despite these setbacks, Solana's native token, SOL, has shown signs of recovery although SOL is currently trading at $22 and is still down 34% from its pre-FTX price level. This increase in SOL's value, combined with the rebound in DEX volume, hints at a resurgence in interest and activity on the Solana network. Additionally, Solana has recently made headlines for passing both Ethereum and Polygon in daily active addresses, which was discussed in an earlier article.
As Solana's DEX volume approaches pre-FTX crash levels, it's evident that the platform is gradually regaining its footing in the market. The recovery in on-chain activity and a potential return of FTX could further boost Solana's prospects and help restore its reputation as the "Ethereum killer." However, it remains to be seen whether this recovery will be sustainable in the long term and if Solana can recapture the momentum it once had.