FTX Causes Chaos on Solana after TVL Dropped 66%

Crypto in turmoil as leading crypto exchange FTX tumbles

The Total Value Locked in decentralized finance platforms on Solana has dropped 66.6% in the past four days, caused by crypto turmoil coming from bankruptcy troubles at FTX. FTX, the leading US-based crypto exchange used user funds, overleveraged, fumbled, and tumbled, taking the entire industry down with it.

Highlights

• Solana has seen its DeFi TVL drop 66.6% to $347.77 million.
• DeFi dapp activity has doubled as the native SOL token lost 53% of its value.
• Solana validators have seen a serious drop in the amount of SOL staked in the ecosystem.

DeFi heavily impacted by FTX

FTX’s venture capital arm is one of the big investors in Solana, a blockchain ecosystem that rose to prominence earlier this year. As news about FTX’s insolvency issues hit the market, trust in Solana’s native token SOL dropped fast. The token lost 53% of its value, now sitting at $14.21. 

The situation has had a strong impact on the DeFi market, as the TVL dropped 19% in the past 48 hours. A big chunk of this drop comes from the Solana blockchain, which has seen its DeFi ecosystem drop 66.6% in value from $1.04 billion on November 6 to $347.44 million today, on November 10. 

Strong impact on dapp activity

As a result of all these problems, dapp activity on Solana has surged. Leading DeFi protocols like Saber, Raydium, Solend, and Orca have seen their activity more than double over the past seven days. All of the DeFi platforms experienced a serious surge in activity on November 9. 

This activity can also be seen in the number of active wallets on the Solana blockchain using the DappRadar Industry Overview. For more than a month, the number of Unique Active Wallets on Solana reached between 40,000 and 45,000, but on November 9 it peaked at 64,980 UAW.

Users unstaking SOL from validators 

The Solana blockchain uses validators to run its ecosystem, and users stake SOL on those validators to strengthen the position of the validator nodes. At the same time nodes pay an APY to users who stake, but those users and sometimes even entire validators are stepping out. 

In Epoch 370 more than 31.2 million SOL was unstaked from validators, while only 2 million was added to the staking pools. Also in the current Epoch 371, more stake will be deactivated than activated. 

This has been a clear response to the issues coming from FTX. Retail investors seemingly are worried and taking precautionary measures by unstaking their SOL. The unstaking of SOL coincides with the increased activity on DeFi platforms mentioned earlier, and it would be safe to assume that some investors swapped their SOL for USDC, or perhaps moved it to a centralized exchange. 

Keep an eye on the Solana action, you can leverage our Solana DeFi page to track its Total Value Locked. At the same time, make sure to follow the charts in the DappRadar Industry Overview to stay on top of industry macro trends.