Solana joins DeFi’s top 5 with $1 billion total value locked

Solana (SOL) reached a $30 billion market cap and close to $1 billion of Total Value Locked (TVL) in DeFi on December 12.

The best performer, “Ethereum-killer” of 2023, has consistently earned cryptocurrency investors’ attention and money this year.

Notably, Solana’s decentralized finance ecosystem now features among the top five chains in TVL. SOL conquered this position after an impressive 43.91% TVL surge in a week to $945.87 million invested tokens worth of dollars.

Finbold retrieved this data from DefiLlama, which provides valuable indicators for the ever-growing DeFi ecosystem. For example, the close to $1 billion TVL on Solana is spread among 244.919 crypto wallet addresses and 117 Solana-based protocols.

Interestingly, SOL only loses to Ethereum (ETH), with $28.17 billion total value locked; Tron (TRX), with $7.92 billion; BNB Chain (BNB) or Binance Smart Chain (BSC), with $3.13 billion; and Arbitrum (ARB), an Ethereum’s second layer, with $2.30 billion TVL.

Most valuable DeFi protocols on Solana

Therefore, the importance of Ethereum for both DeFi and Web3 is unquestionable. Nevertheless, Solana steadily grows in relevancy as valuable protocols are built using its framework. SOL thrives in this competitive environment by offering faster and cheaper transactions than the market leader.

Marinade Finance (MNDE) leads the pack of DeFi protocols on Solana with a total value locked (TVL) of $759.26 million. Jito (JTO) follows with $447.57 million in TVL. Marginfi (MFI) holds $235.16 million, while Solend (SLND) and Orca (ORCA) secure $145.6 million and $120.08 million, respectively.

On that, marginfi and Orca have shown the highest weekly and monthly surges. MarginFi grew by 66% and 135%, while Orca surged by 48% and 87%, respectively in both the last week and month.

Considering everything, a layer-1 blockchain like Solana has its native token’s value pegged to its DeFi ecosystem. A richer ecosystem might increase the demand for SOL as its base asset, rewarding Solana’s stakeholders in the long term.

However, it’s important to consider that part of the measured total value locked comes from liquid staking and lending. This creates a leveraged ecosystem, as Solana’s stakers are using IOU tokens for their previously illiquid investment. The more leveraged a financial ecosystem is, the higher the risks are for every entity involved in it.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.