In the past few hours, altcoins of both large and mid-cap categories have experienced substantial declines in their values. Currently, Solana has registered a 5% decrease in its daily value, whereas Dogecoin has faced a depreciation of 8%. Despite this downward trend in prices, SOL managed to surpass DOGE in terms of market capitalization. Following this development, the gap between them began to widen, with Solana’s lead expanding to $220 million. Notably, SOL recently achieved the status of being the most liquid altcoin on Coinbase, having crossed the $3 million threshold. In contrast, DOGE was attempting to establish its position around the $2.5 million mark. Other altcoins like MATIC and XRP were observed struggling to maintain their position around the $1 million mark.
This increase in liquidity typically signifies higher levels of participation in the market. Additionally, it implies that an asset can be traded without causing substantial fluctuations in its price. Consequently, when compared to Dogecoin as well as other assets like XRP and MATIC, Solana endured comparatively milder losses during this period.
Can Solana Maintain its Dominance?
Solana is currently facing a number of underlying vulnerabilities. In the month of August, the quantity of new addresses integrated into the network is notably lower, at 1.45 million, in comparison to the previous month of July, when 3.27 million new addresses were added. Simultaneously, users have begun withdrawing funds from the protocol’s DeFi ecosystem. As of August 15, the Total Value Locked (TVL) in SOL was recorded at $327.1 million. However, data sourced from DeFiLlama has indicated a reduction in this figure to $308.9 million. Consequently, within a mere two-day span, users have extracted approximately $18.2 million in funds from Solana.
With a decline in the influx of new users to the network and DeFi participants pulling out their investments, Solana may encounter challenges in sustaining its established dominance.