GuShiio.com After the MEME craze subsided, the trading volume on the Solana chain fell by more than 90%; the pledge yield of 7%-8% at the verifier node sucked liquidity like a black hole, and the loan agreement struggled under the suppression of yields.
Author: Frank, PANews
Traditional financial giant Franklin Templeton recently released a survey report on Solana’s DeFi ecosystem. The report pointed out that although Solana’s DeFi business far exceeds Ethereum in terms of transaction volume growth and agreement revenue, the market value of its related tokens is seriously underestimated. Data shows that the average growth rate of Solana’s head DeFi projects in 2024 will be as high as 2446%(Ethereum’s only 150%), and the market-to-revenue ratio will be only 4.6 times (Ethereum’s 18.1 times). In comparison, it is a value depression.
However, when the market turned its attention to Solana’s brilliant record of accounting for 53% of the entire network’s transaction volume, the other side of its ecology was surging. After the MEME craze receded, the transaction volume on the chain fell by more than 90%; The 7%-8% pledge yield at the verifier node sucks liquidity like a black hole, and the loan agreement is struggling under the suppression of yields. Behind this revaluation game triggered by the data paradox, Solana’s DeFi ecosystem is at a critical crossroads. Should we continue to play the role of crypto Nasdaq or risk transforming into an all-purpose financial protocol arena? The SIMD-0228 inflation reduction proposal to be voted on may determine the final direction of this ecological revolution.
Solana DEX transaction volume accounts for half of the entire network
In Franklin Templeton’s report, the main argument centered around Solana’s DEX market share. In fact, Solana’s DEX transaction volume has indeed achieved remarkable results in the past year or so.
In January, Solana’s DEX transaction volume exceeded Ethereum’s DEX transaction volume and all Ethereum Virtual Machine (EVM)-based DEX combined, accounting for 53% of the entire network.
By comparing Solana and Ethereum’s top DeFi projects, we can find that the average growth rate of Solana’s top five DeFi in 2024 will reach 2446%, while the average growth rate of Ethereum will be only 150%. In terms of market capital-revenue ratio, Ethereum’s average ratio reaches 18.1 times, while Solana’s figure is 4.6 times. From this perspective, Solana’s DeFi project does have better advantages in terms of revenue and transaction volume. However, whether this means that Solana’s DeFi is underestimated, and whether the subsequent development of DeFi can become the main theme remains to be further understood.
The choice of ecological positioning: trading center or universal bank?
From the comparison of the DeFi protocols between Ethereum and Solana, we can see that almost all of the top five DeFi projects on Ethereum are mainly pledge and loan projects.
On the Solana chain, most of the top five projects in TVL are aggregators or DEX. Obviously, trading is the main theme on Solana.
From this perspective, if both are compared to financial institutions, Ethereum is more like a bank, and Solana is more like a securities trading center. One is mainly engaged in credit business and the other is mainly engaged in transaction business, with huge differences in positioning.
But at present, both seem to have encountered considerable problems. Ethereum, which focuses on credit, has problems maintaining the most critical value. Solana, which is mainly engaged in trading business, has clearly ushered in a trend of shrinking market liquidity.
Faced with an imbalance in ecological positioning, it may be a good choice for Solana to strengthen credit-related businesses. However, this transformation is slow and long. The TVL on the Solana chain has dropped by 40% since January. However, this decline is mainly due to the decline in the price of SOL. Judging from the number of SOL, the TVL on the chain has not changed much.
Since Trump issued personal tokens, the volume of DEX transactions on the Solana chain has been declining. On January 18, DEX trading volume hit a record high of US$35 billion, and as of March 7, it had dropped to US$2 billion.
Capital competes for pledge income after MEME carnival eases
On the contrary, as the price of SOL fell and MEME coins cooled down, the number of tokens pledged on the chain has actually kept rising in the near future. Taking Jito, who ranks first in TVL, as an example, the number of SOLs participating in pledges has been climbing. Currently, the total pledged volume has reached 16.47 million. Judging from the inflow situation, it has also been in a state of token inflow recently. Since January 1, 2025, net inflow of SOL pledges has increased by 12% year-on-year. It is clear that this growth in TVL mainly comes from token pledges rather than active trading.
However, this asset growth does not seem to flow to the lending agreement, but still flows to the pledge income of the verifier. Even if the verifier pledge income is declining, it still attracts most of the SOL token TVL.
According to Jito’s data, JitoSOL’s APY has been declining since February, along with the decline in the number of bundled transactions and priority fee revenue across the network. As of March 7, JitoSOL’s APY fell to 8.41%. However, compared with other categories of pledge income on kamino, it is still at least 3 percentage points higher.
8% of verifier revenue suppresses DeFi liquidity, SIMD-0228 proposal proposes to solve the deadlock
In fact, the yield on node pledges on the Solana chain is basically maintained at around 7% to 8%. The benefits are generally higher than participating in other types of DeFi protocols. This is why a large amount of funds on the Solana chain choose to pledge funds to various verifier nodes rather than invest them in loan agreements like kamino.
Recently, Solana launched the SIMD-0228 proposal on the chain, which attempts to reduce SOL’s annual additional issuance volume by 80% by dynamically adjusting the inflation rate. At the same time, the adjustment also reduces the pledge yield to promote the flow of funds to other DeFi. (Related reading: Solana Inflation Revolution: Proposal SIMD-0228 sparks controversy in the community, and the risk of a death spiral is hidden behind the 80% additional issuance cut)
According to the simulation results of the new proposal, if the same amount of pledge is maintained, the yield of on-chain pledges will drop to 1.41%, and the yield will drop by 80%. Therefore, the vast majority of funds may be withdrawn from the verifier pledge and selected for other DeFi revenue products.
But there is actually a logical problem here, that is, the best way to promote the flow of funds to DeFi should be to increase the revenue of other DeFi products, rather than reduce the original pledged revenue products. You should know that after funds are withdrawn from the validator node, they do not have to remain in the Solana ecosystem. Based on the profit-seeking nature of capital, the greater possibility is to find higher-yielding products.
By comparing several of the largest TVL products in the ETH chain, such as AAVE, Lido and other products, we can see that the average annualized rate of return on mainstream assets is between 1.5% and 3.7%. In contrast, Kamino on the Solana chain still has certain revenue advantages.
However, for large amounts of funds, another important consideration is the depth of capital liquidity. At present, Ethereum is still the largest capital reservoir among all public chains. As of March 7, Ethereum’s TVL proportion is still 52%, accounting for half of the country. Solana’s TVL volume accounts for approximately 7.53%. The project with the highest TVL in the Solana chain is Jito, with a TVL of approximately US$2.32 billion, which can only rank 13th in the Ethereum ecosystem.
For now, Solana’s DeFi still needs to rely on high returns. SVM and re-pledge platform Solayer recently announced the launch of native SOL pledge, with a direct yield of about 12%. However, according to PANNews observation, this high return is still obtained through the combination of verifiers ‘pledges.
If the SIMD-0228 proposal is implemented, DeFi protocols that rely on the proceeds of validators ‘pledge may face the risk of withdrawing funds. After all, these major high-yield products are mainly achieved through the pledge of verifiers.
In the evolution of Solana’s DeFi ecosystem, although the temporary glory of DEX transaction volume confirms the explosive power of its technical architecture, the negative coupling relationship between pledge revenue and DeFi development is like the sword of Damocles hanging over the ecosystem. Proposal SIMD-0228 attempts to cut this knot, but a mandatory earnings reset could trigger a more complex on-chain butterfly effect than expected. Lily Liu, chairman of the Solana Foundation, also expressed concern about this proposal in a post on platform X. She believed that proposal 0228 was too semi-finished and might cause more uncertainty.
From the perspective of ecological strategy, what Solana needs to build is not only the re-anchoring of the yield curve, but also a revolution in the underlying value capture mechanism. Solana may truly open DeFi’s closed loop of value when verifier pledges transform from a revenue fortress to a liquidity hub, or when lending agreements create compound income models that go beyond simple pledges. After all, the real ecological prosperity does not lie in the number of funds piled up in the pledge pool, but in the permanent cycle of capital among lending, derivatives, and combination strategies. This may be the Goldbach conjecture that Ethereum killers need to jointly solve.
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