The original cryptocurrency Solana, known as SOL, has experienced a significant price decrease of 21 percent over the past week, reaching its lowest point in nearly six weeks. This decline has triggered a massive $113 million liquidation in long futures contracts for SOL using leverage since April 11, indicating that investors might have been too optimistic following a 61 percent price surge in March. This shift has raised speculation about potential further corrections and the support level at $130.

Solana Ecosystem Growth and Coinbase Integration

According to Cointelegraph, the Solana ecosystem has seen significant growth, further strengthened by its integration into major platforms like Coinbase. On April 16, Coinbase announced that its wallet now supports over 50,000 SPL Solana tokens through integration with the Solana decentralized exchange (DEX) ecosystem. This development enhances user accessibility by simplifying the trading process, allowing users to directly input contract addresses into the exchange flow, thereby reducing barriers to entry into the Solana ecosystem. However, Solana's market capitalization of $60 billion appears high, especially compared to competitors like Avalanche and Tron, with market capitalizations of $13 billion and $10 billion, respectively. Despite this, some analysts argue that Solana's premium is justified by its rapid ecosystem expansion and growing number of projects launching their own tokens on the platform. From April 12 to April 17, open interest in SOL futures decreased by 40 percent to $1.5 billion, indicating a decline in leverage demand.

The dynamics of futures funding rates for SOL during this period may provide insights into whether this decline is primarily due to decreased interest in long positions.

Network Issues and Their Impact on Projects

Amidst these financial fluctuations, the Solana network is facing severe congestion issues, with transaction failure rates reaching up to 75 percent. Developers have implemented upgrades to address these obstacles. However, these network issues have led some projects to postpone their launches until the platform stabilizes, adding uncertainty surrounding Solana. Additionally, SOL has encountered issues in key projects like MarginFi, where CEO Edgar Pavlovsky's resignation on April 10 resulted in a $190 million withdrawal. Controversy escalated when another Solana-based project accused MarginFi of failing to release credit to users, highlighting volatility and challenges in the ecosystem. Despite these difficulties, the decline in SPL Solana tokens is evident in the decentralized finance (DeFi) sector. Tokens like Jito (JTO), Raydium (RAY), and Jupiter (JUP) experienced significant decreases of 29 percent, 24 percent, and 27 percent, respectively. Even leading Solana meme coins, including Dogwifhat (WIF), saw a sharp decline of 32 percent over a six-day period.

Solana dApp Activity as a Price Indicator

Nevertheless, activity in Solana's decentralized applications (dApps) remains a vital indicator of Solana's price movements. Increased dApp usage inherently boosts SOL demand, stemming from network usage fees and participation in SPL token airdrops.

Recent data from DappRadar shows a significant 60 percent surge in Solana dApp volume to $1.3 billion over the past week, surpassing its competitors. Ethereum and BNB Chain saw increases of 20 percent and 13 percent, respectively. Despite these gains, the number of active Solana users remains stable at around 2 million, while the Ethereum network has experienced a slight decrease in active addresses. The combination of stable demand for leverage in futures markets with strong on-chain activity suggests that SOL may maintain its competitive position in the broader altcoin market.