The Solana ecosystem is constantly evolving, with the focus shifting from decentralised exchanges (DEXs) and NFT markets to emerging consumer applications. Recent research by Messari has highlighted the increasing prominence of these consumer apps, indicating a shift in user preferences.
Over the past six months, consumer apps have captured over 10% of the user share, currently commanding a significant 28% share in the ecosystem. While other sectors have also shown improvements, they haven’t experienced the same level of growth and intensity as consumer platforms.
Consumer applications have experienced significant growth in the past six months, capturing more than 10% of the user share. They currently hold a substantial 28% share in the Solana ecosystem. Although other sectors have also seen advancements, they haven’t achieved the same level of prominence and impact as consumer platforms.
Although Solana has successfully attracted new users, it faces a challenge in retaining them over the long term. The retention curve of Solana has been declining, and it has the lowest retention rate compared to its peers. In contrast, networks such as Ethereum, Avalanche, Polygon, and BNB Chain have performed better regarding user retention. The retention numbers on Arbitrum and Optimism have been the highest among the mentioned networks.
However, even that’s started going downhill now. Chalking out how Solana could solve this problem, Messari’s report noted,
“To sustain growth, Solana needs more compelling and distinctive applications that provide a captivating user experience.”
The TVL Struggle
In addition to struggling with user retention, Solana has also faced challenges in retaining funds locked within its ecosystem. According to Messari’s report, the Total Value Locked (TVL) in Solana has decreased since the start of 2022 and currently stands at a mere $1 billion.
This is the lowest TVL among other prominent protocols. In comparison, Ethereum maintains a TVL of around $68 billion, while other protocols like BNB Chain, Arbitrum, Avalanche, Polygon, and Optimism have TVL readings ranging from $1.3 billion to $5.3 billion.
Highlighting why Solana’s performance on this front has been underwhelming, Messari noted,
“Solana’s focus on consumer applications has led to a shift in user activity away from DeFi and toward consumer protocols.“
Despite experiencing a decline in on-chain liquidity, Solana’s developer ecosystem has displayed resilience during its evolution and maturation. Developers have been actively building new functionalities, particularly in the consumer sector, such as programmable NFTs and compressed NFTs, which have helped to offset the challenges.
Additionally, lending platforms like Sharky have witnessed a surge in transaction activity on Solana, attracting new users and achieving “impressive retention rates.” This positive development has provided a more optimistic outlook for Solana’s overall performance.
Solana’s price has increased by 2.36% in the last 24 hours. However, it has been trading within a horizontal consolidation range since the first quarter and cannot break out of this range. Currently, the price of SOL stands at $21.20.