With the liquidity shifting to the most promising markets, Solana (SOL) has attracted more stablecoins in the past day. The shift towards DeFi lending and DEX activities is driving this trend.
Solana (SOL) is set to become one of the most active chains in 2024. Solana has seen an increase in stablecoin inflows in the last few days of this year, surpassing all other blockchains. According to Lookonchain’s data, Solana has attracted over $454 million in stablecoin inflows in the past week. The methods of tracking fund flows differ, but the overall trend is to connect stablecoins more positively to Solana’s applications and loan pools.
Solana has also surpassed Base, despite the recent surge in the use of AI proxy tokens. The flow of stablecoins may vary based on the available potential yield of various chains. Arbitrum was once one of the key L2 chains with the largest stablecoin outflows.
Despite the L2 narrative, not all chains have been able to attract value so far this year. Former DeFi star ZKSync Era has seen a net outflow of over $2 billion along with Linea, Blast, and Avalanche.
Stablecoins have boosted optimism, Base, Solana, Arbitrum, and SUI so far this year. Ethereum remains the most active chain for hosting USDT, increasing the available liquidity. Overall, stablecoins, driven by Tether, have surpassed the $200 billion mark, in addition to the newly minted coins of DAI, USDS, and Ethena’s USDe.
Ethereum remains the donor of stablecoins, with the flow shifting to Solana and Base.
The liquidity of stablecoins has changed in the short term, with Solana taking the lead as of December 30th. The chain had a net inflow of $8.8 million on that day, followed by SUI with $2.9 million. Solana is competing with Base for fund inflows, although it has only ranked second in the past three months.
Base remains the most important destination for stablecoin inflows so far this year. The chain has attracted $7.8 billion in fund inflows, with $3.5 billion retained as net inflows.
Solana has attracted $5.3 billion in new fund inflows so far this year, while retaining $2.1 billion as net inflows. The chain recently added over $100 million from the Sky ecosystem to expand DeFi lending.
As a result, Solana holds $5.254 billion worth of bridged stablecoins, with the locked-in total value rising to $8.58 billion. Solana has lagged in attracting value, peaking at just over $9 billion in December with a variety of tokens and stablecoins. Jito Liquid Staking and Kamino Finance have locked in most of the value, but DEXs, like Raydium and Jupiter, have also gained $4.47 billion in liquidity.
The measurement of stablecoin flow depends on available applications. Arbitrum is one of the EVM-compatible chains with highly active bridging. For Solana, bridging from Ethereum is rarer, but once funds are sent to Solana, they are more likely to stay. On the other hand, Arbitrum’s turnover is much more active.
Recent trends in stablecoin flow indicate a change in traders’ expectations so far this year. With Solana and Base becoming top chains carrying AI proxy tokens, this trend has accelerated. Bridging stablecoins for trading is crucial for entering new markets as they are the sole source of these tokens.
Meme tokens have been one of the primary drivers of Solana’s growth in recent months, with two significant expansion series. However, not all traffic on Solana has the same quality. The chain has had several low-value transactions with a failure rate of up to 35%.
Over the past year, Solana has also been a leader in conducting trading bot activities. The use of routing and bots is crucial for Solana to ensure the success of DEX trades or token sniping.
Up to 86% of trading bot traders use Solana as their target chain. Most of Solana’s traffic also comes from wallets with a balance of 0.01 SOL. However, the influx of stablecoin activity indicates that value is also accumulating, often related to whale wallets using the protocol.
Solana’s lending expansion also depends on meme tokens. Some major memes, such as DogWifHat (WIF), are used as collateral for Kamino to borrow more stablecoins.
