The contagion effects of FTX’s collapse are being felt throughout the crypto industry, but one blockchain’s DeFi ecosystem is seeing considerably more pain.
Data from DeFiLlama shows that the Total Value Locked (TVL) on Solana fell from $963 million on Nov. 5 to $289 million on Nov. 20. Solana, which was once in the top 3 DeFi blockchains with $10 billion in TVL, now ranks 11th after DeFiChain.
Solana DeFi protocols saw a steep decline after FTX was declared insolvent and filed for Chapter 11 bankruptcy on Nov. 11. FTX CEO Sam Bankman-Fried was a backer of the Solana blockchain, sometimes openly betting on the continued appreciation of the native token’s price.
On Nov. 10, the Solana Foundation shared details of their exposure to FTX and Alameda. Despite holding only $1 million worth of cash on FTX.com, the entity also held 3.24 million of FTX common stock, 3.43 million of the exchange’s native token FTT and 134.5 million native tokens of the Serum DEX founded by Bankman-Fried.
Since FTX’s collapse, major Solana tokens have lost a big chunk of value. These included Serum’ SRM, which is currently 76% lower than it was prior to FTX’s demise and SOL itself, which is down 65% over the same period.
These lower token prices have also affected the profitability of Solana validators – stakeholders that form the backbone of the blockchain. A number of validators have exited the network, leaving 60 million SOL tokens in the last five epochs.
“My main concern about Solana rn is that as the token price drops, some more validators can become unprofitable and quit, which can further hurt price,” tweeted crypto investor Ajit Tripathi.
While market sentiment around Solana has dwindled, the exodus of TVL from its DeFi ecosystem may not just be centered around its ties to Bankman-Fried’s fallen crypto empire.
TVL is a measure that includes stablecoins, and on-chain data shows that a significant volume of stablecoins are leaving Solana as well. On Saturday, USDT issuer Tether removed $1 billion USDT on Solana in a chain swap, converting USDT held on Solana to the Ethereum blockchain.
Tether’s chain swap follows a move from crypto exchanges Binance, OKX and Bybit to suspend operations with USDC and USDT on Solana on Nov. 17. Binance later resumed stablecoin deposits on Solana, but did not explain the rationale behind their initial halt.
