Hype Does Not Equal Moat: Solana's Wall Street Story Is Hard to Tell

Survived FTX, but struggles to shake off meme dependency.

Written by: Suvashree Ghosh, Bloomberg
Compiled by: Saoirse, Foresight News

As the most actively traded blockchain globally, one would expect Solana to easily impress Wall Street, but its story is far from simple. Much of its early notoriety was built on various meme coins and tokens riding the wave of Trump’s popularity.

This public chain received early investments from Sam Bankman-Fried (SBF) and was once seen as the next big opportunity in the crypto industry. In 2022, SBF's FTX exchange collapsed, but Solana weathered the crisis and returned to market visibility, heavily reliant on speculative trading driven by meme coins.

In recent weeks, the demand for Solana's native token SOL (one of the few surviving “Sam Coins” that received SBF's funding) has continued to weaken, with a year-to-date decline nearing 20%.

Meanwhile, the SOL spot and staking ETFs listed in the U.S. recorded a total outflow of $50 million over the past two weeks. Digital asset management firm SkyAI also liquidated all its SOL holdings this month, abandoning its original positioning to fully pivot towards the AI sector.

“The biggest risk is mistakenly believing that current trading hype guarantees long-term competitiveness,” said Michael Weisz, CEO of the Solana-based lending platform Kamino.

Solana ranks at the bottom among leading cryptocurrencies

As Wall Street continues to increase its investment in the crypto space, the industry's focus is shifting towards more traditional financial applications like stablecoins and tokenized real assets. While Solana's long-term investment value remains contentious, it is actively positioning itself in this arena and has made some progress in tokenized stock scenarios.

The overall downturn in the crypto market has further amplified its challenges. Following a brief surge after Trump's election, coin prices have continued to decline, with most tokens struggling to recover their losses. Some speculative funds have shifted to chase AI-related returns, while a new wave of emerging public chains in vertical sectors has risen to compete with Solana.

The Solana Foundation, a non-profit organization based in Zug, Switzerland, supporting the network's development, stated that transformation efforts are underway. Foundation chair Lily Liu noted that the institution's on-chain transfer of real funds and physical assets has become the fastest-growing business for the chain. She added that Solana's fast network and low fees are sufficient to support large-scale global payments and capital market operations.

When it launched six years ago, Solana's core selling point was its speed and lower costs compared to competitors (especially Ethereum). However, this characteristic also made it inherently suitable for speculative trading, which remains its primary source of revenue today.

Lucas Tcheyan, Vice President of Research at Galaxy Digital, pointed out, “Compared to Ethereum, Solana's fee revenue is more dependent on speculative trading, and the decline from its 2025 peak is also more significant.” He also mentioned that Solana's current goal is to encourage users to migrate more financial activities on-chain, covering scenarios like trading, saving, and payments.

The ecosystem of this public chain is diversifying. A report from Galaxy Research shows that the proportion of meme coin trading volume has dropped from over 50% at the end of 2024 to 15%-20% in the second quarter of this year.

The Solana Foundation reported that major financial institutions like JPMorgan, Morgan Stanley, and Standard Chartered are now conducting business on the network.

Leading payment service providers like Visa and Fiserv have also chosen Solana. Western Union issued the USDPT stablecoin on the Solana chain in May this year.

However, recently, the business Solana aims to capture is increasingly being siphoned off by competitors.

Hyperliquid has become a popular platform for on-chain perpetual contracts. These contracts have no expiration date, allowing traders to bet on the price movements of cryptocurrencies, stocks, and commodities. According to Tcheyan's data, after Hyperliquid issued its HYPE token, Solana's share of on-chain perpetual contract trading volume dropped from 17% to 6% within a year.

On the other hand, Ethereum remains the foundational cornerstone of decentralized finance. Robinhood Chain and Base, launched by Coinbase, are both built on Ethereum's layer two network; Stripe, in collaboration with Paradigm, incubated Tempo, and Binance's BNB Chain is an independent public chain compatible with the Ethereum ecosystem.

Solana itself is also continuously iterating. On October 21, the network completed the Alpenglow upgrade, further enhancing transaction speed. However, the value of technical optimizations can only be realized when they retain users and liquidity during a bear market.

Weisz stated, “Growth will only truly reverse when quality assets, developers, and customers choose to leave for better experiences on other platforms.”