“Onchain is Dead”, Yet TradFi Inflows Remain Strong - Has this Cycle Peaked?

Cascading liquidations across the wider crypto market have sown seeds of doubt and uncertainty throughout Solana’s onchain economy.

In the wake of over $1.6B worth of long liquidations, onchain activity has ground to a halt. An eerie silence has replaced last week’s cacophanous CCM meta, as new token deployments hit their lowest point since April. 

Solana’s perps scene continues to suffer eroding dominance, watching one of crypto’s biggest markets from the sidelines.

Token Deployments Hit Lowest Point Since April

Seven days and a few red candles really does make all the difference. Just a week ago, viral launchpad pump.fun was spitting out over 34,000 new tokens a day, with creators and streamers netting over $3M a day in rewards.

One large leverage flush and a few hundred thousand token launches later, the trenches look more like a ghost town than the future of finance. According to Solscan data, daily token launches on the network dropped to 30.3k on September 22, representing a 40.47% decrease when compared to the 50.9K recorded on September 15. 

Trading activity on Pump.fun has also fallen off a cliff, sliding from $770M on September 15 to a mere $229M on the 22nd, based on DefiLlama data. 

However, despite the grim outlook held by Solana’s trench dwellers and memecoin traders that “onchain is dead”, DEX volumes across a wider range of asset classes remain consistent.

While DEX volume across the network remains stable, memecoins are steadily capturing less and less attention. Memecoins now command as little as 10% of market share, signaling greater maturity in onchain markets and changing appetites among DeFi users. 

KOLs and degens may argue that onchain is dead, but the reality is that the traders are simply gravitating to more reliable markets and asset classes.

Solana Perps Dominance Drops to 4%

Unfortunately for Solana, the shift to more mature assets and project tokens hasn’t manifested in a flourishing onchain perpetual trading scene. Despite boasting crypto’s most active onchain spot trading economy, Solana is lagging behind rivals in the perps sector.

According to DefiLlama, Solana’s place in crypto’s wider onchain perps scene is steadily declining, with Solana-based trading platforms (pictured in dark brown) accounting for a mere 4.6% of decentralized perps.

Much of Solana’s perceived difficulty in providing efficient perps markets stems from being a general-purpose Layer-1. While Solana’s expansive ecosystem makes it a powerful and diverse base layer, network congestion, priority fee spikes, and latency concerns have driven perps traders to alternative platforms.

That being said, Solana could be on the verge of a perps renaissance. Unencumbered by the Layer-1’s restrictions, a wealth of emerging perpetual exchanges, like Bullet and Bulk, are expected to launch in the coming months to revitalize Solana’s stale perps scene.

Traders Call for Market Tops

But is it all too late? As the dust settles on one of the biggest liquidation events in recent memory, traders across the space are asserting that the cycle has peaked. KOLs argue that stock outperformance and the sheer saturation of revenue-less tokens polluting the market indicate that attention and liquidity are focusing on other financial sectors.

However, one could argue that with Solana ETFs expected to go live within the next month and continued $SOL DAT raises, like Forward Industries $4B ATM Equity offering, markets could still witness sufficient demand to maintain a bullish trajectory.

Despite Monday’s brutal sell-off, TradFi players are still demonstrating an appetite for $SOL. REX Osprey’s Solana Staking ETF, $SSK, witnessed $27M in capital inflows on September 22nd, lifting its AUM to $306M. Meanwhile, CoinShares also reported that Solana-based Digital Asset Products enjoyed over $127M in inflows, marking 15 consecutive weeks in the green.

Contrasting data suggests that Solana may be undergoing an image metamorphosis. Memecoins may be out, but inflows indicate that TradFi is more than happy to fill the void. 

Publicly traded TradFi vehicles like Galaxy and Forward Industries are actively tokenizing their stock onchain and introducing DeFi composability, while the onchain perps scene anticipates the launch of more competitive platforms. 

While it's impossible to predict cycle tops and market movements, it is evident that Solana’s onchain economy is rapidly becoming far more resilient and far more mature.

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