Can Cardano Benefit From Collapse of Solana’s DeFi?
![](https://cryptonewswire.org/wp-content/uploads/https://u.today/sites/default/files/styles/twitter/public/2023-02/30952.jpeg)
Solana (SOL) and Cardano (ADA) are the most popular competitors to Ethereum (ETH) in terms of market capitalization. Both offer solutions to the scalability problem of the leading altcoin in the blockchain sector. While ADA only suffered from the market downturn that affected other cryptocurrencies in 2022, SOL had to deal with this pressure along with the collapse of FTX.
With the collapse of SBF’s companies, big altcoin supporter Solana lost more market capitalization than Cardano. However, this led to SOL experiencing significantly higher growth than the older cryptocurrency in 2023. This is because, in January, ADA experienced a market appreciation of 45%. In contrast, SOL grew by 130% in the same period.
The two cryptocurrencies grew for different reasons. Solana was heavily impacted by the rise of the meme altcoin, Bonk (BONK). With the token on the altcoin network increasingly sought after by new investors, the movement on SOL’s blockchain was very high.
On the other hand, Cardano grew with enthusiasm surrounding releases on its blockchain, such as nonsynthetic stablecoins and updates that would bring more scalability and interoperability to the smart contract platform with other networks.
DeFi: Solana vs. Cardano
Another difference between the cryptocurrencies can be seen in the decentralized finance (DeFi) sector. Solana saw its total value locked (TVL) rise from $206 million in early January to $264 million by the end of the month. According to DeFiLlama data, the TVL of Cardano rose from $48 million to $74 million. Although the growth of ADA in this arena was higher, largely due to lower TVL than SOL, the increase in competition was also significant.
Unfortunately for Solana enthusiasts, the cryptocurrency was unable to maintain this growth. Its TVL has suffered considerable drops in recent days as a result of disinterest in Bonk, an altcoin that managed to boost the volume of decentralized exchanges (DEXes) on SOL’s blockchain.
Speaking of DEXes on Solana, they are also experiencing a slowdown. On Feb. 10, the trading volume on these exchanges had decreased to $41.58 million, representing a 27% drop compared to the previous month. While its DEXes have gained popularity among investors and traders alike, the recent slowdown could indicate a move toward alternatives on the part of users.
Additionally, the DeFi protocol Everlend Finance on Solana informed the community of the suspension of its services due to insufficient liquidity, resulting in a 6% reduction in total value locked (TVL) in the cryptocurrency. The decrease in demand for loan-related assets has contributed to this crisis in DeFi projects. The Everlend team stated that the DeFi product code will remain open for possible updates.
Is there room for Cardano?
This could be a good time for Cardano to grow on the DeFi market. In terms of TVL, it continues to take positive steps, with $102 million in total value locked at the time of writing. One of the factors helping the smart contract platform to maintain this movement is the fact that it did not rely on meme speculation for its growth in 2023.
Stablecoins, while having their issues, are of much greater importance to an asset than a simple token with a dog logo. The arrival of Djed marked Cardano’s presence in decentralized finance and could be a significant catalyst for the altcoin’s TVL in an upcoming bull run. Additionally, the promise of decentralized oracles offering services similar to Chainlink’s could also help with the cryptocurrency’s value proposition.
But Djed was not the only surprise that ADA holders had in this first quarter of 2023. After all, Liqwid, a decentralized lending protocol, is also present in Cardano, contributing to its development in DeFi.