Solana (SOL) On-Chain Revenue Plummets 93% as Meme Coin Frenzy Cools Off

Solana's weekly revenue hit an all-time high of $55.3 million in January, driven by a surge in meme coins.

Solana's on-chain revenue has dropped sharply over the past two months as the meme coin frenzy that boosted the network's success has cooled off. In January, Solana's weekly revenue hit an all-time high of $55.3 million, largely driven by a surge in meme coins.

However, new data shows that revenue has tanked by 93%, falling to around $4 million in the past week, marking the lowest level since September. This revenue drop is a bombshell for Solana, highlighting the significant challenges the blockchain is facing.

Besides the revenue dip, Solana's weekly decentralized application (DApp) revenue has also decreased, dropping by about 86%. DApp revenue fell from $238 million in mid-January to $32 million in recent weeks. These are significant hits to Solana's ecosystem.

DeFi Sector Takes a 50% Plunge

These losses are happening as Solana's decentralized finance (DeFi) sector declines, with total value locked (TVL) in DeFi projects falling by 50%.

TVL dropped from over $12 billion in January to around $6.4 billion today. This DeFi downturn adds another layer to Solana's challenges.

This downturn in Solana's performance coincides with a sudden fall in meme coin trading activity, which had been a major source of network revenue. According to a March 5 report by VanEck, meme coin trading, especially on the Pump.fun platform, made up 80% of Solana's revenue during its peak. Daily revenue from Pump.fun reached $15 million in late January but has since crashed 95%, down to around $800,000 as of March 7. The meme coin boom turning to bust is a key factor.

This decline comes after the peak of memecoin mania, which was largely fueled by the launch of Donald Trump’s TRUMP token on January 18 and Melania Trump’s MELANIA token soon after. However, as CoinGecko founder Bobby Ong mentioned, the launch of these tokens was the peak of the meme coin craze, pulling liquidity and attention away from other digital assets.

Solana Looks to Tokenomics Revamp for Revival

To deal with these challenges, Solana's community is considering a new governance proposal. The Solana Improvement Document (SIMD)-0228, written by Tushar Jain and Vishal Kankani of Multicoin Capital, along with Max Resnick, proposes a more flexible inflation model for Solana's SOL tokens.

Unlike the current fixed inflation schedule, the proposal suggests changing token releases depending on the level of participation in staking. This new approach could help restore hope for Solana in the face of pressing challenges.