- Solana price had a terrible year in 2022 as its ecosystem recoiled.
- Its DeFi total value locked (TVL) slumped from over $12 billion to $372 million.
Solana price had a terrible performance in 2022 as cryptocurrencies plunged and concerns of its exposure to FTX rose. After being a bright shining star in 2021, SOL price plunged by more than 91% in 2022. It plunged from an all-time high of $260 to $10.
The rise and fall of Solana
Solana is one of the several blockchain networks that sought to become a better alternative to Ethereum. Unlike Ethereum, it was built on a proof-of-stake (PoS) technology, which is faster and climate-friendlier. Further, Solana is able to process thousands of transactions per second while Ethereum handles less than 20.
As a result, investors piled into Solana. The developers raised more than $314 million from investors in 2021. Most importantly, developers rushed into its ecosystem. Some of the top companies that embraced the technology are Stripe, Step’N, Meta Platforms, Circle, Google, and Discord, among others.
Solana became one of the best platforms for the transition from Web2 to Web3. Most importantly, the technologies it powered had a real use-case. For example, Audius is disrupting the music streaming industry while Brave is disrupting the browser sector.
Solana became a major player in Decentralized Finance (DeFi), one of the top industries in the blockchain sector. At its peak, the total value locked (TVL) in DeFi jumped to more than $12 billion. This growth was helped mostly by Serum, which was one of the biggest platforms in the industry. Today, there are just $372 million worth of assets in its ecosystem.
Solana’s fall came at the intersection of two main factors. First, it coincided with the collapse of cryptocurrencies. Second, the collapse of Serum and its affiliation with FTX and Alameda Research played a major role. The two firms were among the biggest holders of the SOL token.
Will Solana price recover in 2023?
A common question is whether SOL price will recover in 2022. This recovery will depend on numerous factors. First, it will depend on the overall performance of the cryptocurrency sector. Since cryptos have a close correlation, there is a likelihood that their recovery will drag Solana higher as well.
Second, it will also depend on the performance of Solana’s ecosystem. A recovery of top applications like Marinade Finance, Orca, Raydium, and Credix will be a bullish factor the coin.
Finally, its recovery will depend on how the developers chart a new path for the ecosystem. Some activities have started to happen. For example, Chainlink enabled its oracle tools on Solana, making it the first instance for a non-EVM platform. They have also launched Solana Pay and inked partnerships with leading players like Google.
