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Here’s why Solana is stronger than ever; Is SOL a buy right now?

Here's why Solana is stronger than ever; Is SOL a buy right now?

Solana (SOL) has grown stronger in 2023 despite the regulatory crackdown that impacted the cryptocurrency market. With growing adoption and bullish economic indicators, crypto investors wonder if SOL is a current ‘buy.’

It is important to highlight that the investment decision to buy a given asset must be personal. Speculators must come to their own conclusions after doing their due diligence on the desired financial product.

Nevertheless, Finbold gathered fundamental aspects about Solana to provide valuable insights. We evaluated adoption, staking, decentralized finance (DeFi), and tokenomics.

Solana investors are staking 93% of SOL’s total circulating supply

Interestingly, investors are staking more than 93% of all Solana’s native tokens in circulation. Data retrieved by Finbold on December 2 from StakeRewards shows 395.88 million SOL staked in the protocol.

Stake SOL data on December 2. Source: StakingRewards

Notably, this staked amount represents 93.33% of Solana’s circulating supply of 424.21 million SOL. A similar result is reached by comparing the “Staking Market Cap” of $24.64 billion to SOL’s capitalization of $26.43 billion, according to StakingRewards, or $26.37 billion on CoinMarketCap’s index.

Solana market data on December 2. Source: CoinMarketCap

Solana DeFi TVL surged 63% in a month to $678.7 million

The Total Value Locked (TVL) from the Solana DeFi ecosystem surged by 63% in a month and 12.24% in a week. Data is from DefiLlama on December 2.

This TVL increase puts Solana at the forefront of decentralized finance growth. In particular, SOL outperformed other chains and reconquered Avalanche’s (AVAX) seventh position with $678.7 million locked and used in its protocols.

Total Value Locked (TVL) in DeFi chains. Source: DefiLlama

Essentially, both 93% staking and TVL growth signal an increased demand for SOL. Moreover, they signal investors are willing to lock their liquidity for the long term, suggesting trust in the protocol.

Recently, Coinbase, one of the largest cryptocurrency exchanges, announced they will add support to Solana.

The bearish case for Solana

However, there is also a bearish case to consider. Solana has one of the most inflationary tokenomics among all cryptocurrencies.

This massive supply inflation affects investors, as demonstrated in the price loss after reaching Solana’s all-time high market capitalization. Additionally, StakingRewards considers a negative “Real Reward Rate” for SOL staking, adjusted by its yearly inflation.

Solana’s daily token unlocks are worth approximately $5.33 million, and they can pose a threat to holders. Meanwhile, SOL’s impressive performance in 2023 could encourage investors to dump and realize profits.

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

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