Behind the "undervalued" Solana DeFi: How to break the "ecological internal friction" between high-yield pledge and lending agreements?

Author:Frank , PANews

Traditional financial giant Franklin Templeton recently released a survey report on the Solana DeFi ecosystem. The report pointed out that although Solana's DeFi business far exceeds Ethereum in terms of transaction volume growth and protocol revenue, its related token market value is seriously undervalued. Data shows that the average growth rate of Solana's leading DeFi projects in 2024 is as high as 2446% (Ethereum is only 150%), and the market-value-to-revenue ratio is only 4.6 times (Ethereum 18.1 times), which is a value depression in comparison.

However, when the market turned its attention to the brilliant record of Solana DEX trading volume accounting for 53% of the entire network, the "other side" of its ecosystem was undercurrent. After the MEME boom receded, the on-chain trading volume fell by more than 90% in a cliff-like manner; the pledge yield of 7%-8% of the validator node absorbed liquidity like a black hole, and the lending agreement was struggling under the suppression of yields. Behind this value revaluation game triggered by the data paradox, Solana's DeFi ecosystem is standing at a critical crossroads - should it continue to play the role of "crypto-Nasdaq", or risk transformation into an all-round financial protocol arena? The upcoming SIMD-0228 inflation reduction proposal to be voted may determine the final direction of this ecological revolution.

Solana DEX trading volume accounts for half of the entire network

In Franklin Templeton's report, the argument is based on Solana's DEX market share. In fact, Solana's DEX trading volume has indeed achieved remarkable achievements in the past year or so.

In January, Solana's DEX trading volume exceeded Ethereum's DEX trading volume and all Ethereum virtual machine (EVM)-based DEX trading volume, accounting for 53% of the entire network.

By comparing Solana and Ethereum’s top DeFi projects, we can find that the average growth rate of Solana’s top five DeFi in 2024 reached 2446%, while the average growth rate of Ethereum was only 150%. In terms of market value to revenue ratio, Ethereum's average ratio reaches 18.1 times, while Solana's value is 4.6 times. From this perspective, Solana's DeFi project does have better advantages in terms of revenue and transaction volume. However, whether this shows that Solana's DeFi is an underestimated state, and whether the subsequent development of DeFi can become the main theme remains to be further understood.

The choice of ecological positioning: trading center or an all-round

bank?

Comparing the DeFi protocols between Ethereum and Solana, we can see that almost all of the top five DeFi projects in Ethereum are mainly pledge and lending projects.

On the Solana chain, most of the top five projects in TVL are aggregators or DEXs. Obviously, trading is the main theme on Solana.

From this perspective, if both are compared to financial institutions, Ethereum is more like a bank, while Solana is more like a securities trading center. One is mainly engaged in credit business and the other is mainly engaged in trading business, and there are huge differences in positioning.

But at present, both seem to have encountered considerable problems, and Ethereum, which focuses on credit, has problems in maintaining value the most critical. Solana, which mainly engages in trading business, has clearly ushered in a trend of market liquidity collapse.

Faced with the imbalance of ecological positioning, it may be a good choice for Solana to enhance credit-related businesses. However, this transformation has a long way to go. TVL on the Solana chain has fallen by 40% since January. However, this decline is mainly due to the decline in SOL's price. Judging from the number of SOLs, TVL on the chain has not changed much.

Since Trump issued his personal tokens, the DEX trading volume on the Solana chain has been declining. On January 18, DEX trading volume hit an all-time high of $35 billion, and had fallen to $2 billion as of March 7.

MEME After the carnival ebb, capital competes for pledge proceeds

On the contrary, with the price of SOL falling and the cooling of MEME coins, the number of tokens pledged on the chain has actually remained on the rise recently. Taking Jito, the number of SOLs participating in staking as an example, the number of SOLs participating in staking has been rising. The total staking has reached 16.47 million. Judging from the inflow, it has been in a token inflow recently. Since January 1, 2025, the net inflow of SOL pledges has increased by 12% year-on-year. It is obvious that this growth in TVL mainly comes from token staking rather than trading activity.

But this asset growth does not seem to flow to lending agreements, but is still turning to validator pledge gains. Even though the staking income of verifiers is in a downward state, it still attracts most SOL tokens TVL.

According to Jito data, JitoSOL's APY has been in a downward state since February, and the number of bundled transactions and priority fees revenue across the entire network are also falling. As of March 7, JitoSOL's APY fell to 8.41%. However, it is still at least 3 percentage points higher than the pledge income of other categories on Kamino.

8% of validators' income suppresses DeFi liquidity, SIMD-0228 proposal

intends to unravel the dead

In fact, the yield of node pledges on Solana chain is basically maintained at around 7% to 8%. The benefits are generally higher than those involved in other types of DeFi protocols. This is why a large amount of funds on the Solana chain choose to pledge funds to various validator nodes instead of investing in lending protocols like Kamino.

Recently, Solana launched a proposal for SIMD-0228 on the chain, trying to reduce SOL's annual issuance by dynamically adjusting the inflation rate to 80%. The same adjustments also include reducing the pledge yield to encourage funds to flow to other DeFi. (Related reading: Solana inflation revolution: SIMD-0228 proposal triggers community controversy, with the hidden risk of "death spiral" behind the 80% reduction in additional issuance )

According to the simulation results of the new proposal, if the same pledge amount is maintained, the yield of on-chain pledge will drop to 1.41%, and the yield drop will reach 80%. Therefore, the vast majority of funds may be withdrawn from the stake of verifiers and choose other DeFi earning products.

But there is actually a logical problem here, that is, the best way to promote the flow of funds to DeFi should be to increase the income of other DeFi products, rather than reduce the original pledged income products. You should know that after withdrawing funds from the validator node, they do not necessarily need to stay in the Solana ecosystem. Based on the characteristics of capital profit-seeking, the greater possibility is to find higher-yield products.

By comparing several of the largest TVL products on the ETH chain, such as AAVE, Lido and other products, we can see that the annualized yield of general mainstream assets is between 1.5% and 3.7%. In contrast, Kamino on the Solana chain still has certain profit advantages.

However, for large-scale funds, another important consideration is the depth of capital liquidity. Currently, Ethereum is still the largest capital reservoir among all public chains. As of March 7, Ethereum's TVL accounted for 52%, accounting for half of the market. Solana's TVL volume accounts for about 7.53%. The highest project of Solana-chain TVL is Jito, with TVL about US$2.32 billion, and this data level can only rank 13th in the Ethereum ecosystem.

As of now, Solana's DeFi still needs to rely on high returns. SVM and re-staking platform Solayer recently announced the launch of native SOL pledge, with a direct yield of about 12%. However, according to PANews' observation, this high return is still obtained through the combination of validator pledges.

If the SIMD-0228 proposal is implemented, those DeFi protocols that rely on the pledge income of validators may face the "stampage risk" of fund withdrawal. After all, these major high-yield products are mainly achieved through verifier pledge.

In the evolution of Solana's DeFi ecosystem, although the glory of DEX's short-term trading volume has confirmed the explosive power of its technical architecture, the negative coupling relationship between pledge income and DeFi development is like the sword of Damocles hanging above the ecology. The SIMD-0228 proposal attempts to cut this deadlock, but a mandatory return reset may trigger a more complex on-chain butterfly effect than expected. Lily Liu, chairman of the Solana Foundation, also expressed concerns about the proposal on the X platform. She believes that "the 0228 proposal is too half-finished", which may cause more uncertainty.

From the perspective of ecological strategy, what Solana needs to build is not only the re-anchoring of the yield curve, but also a revolution in the underlying value capture mechanism. When validator pledges change from a bastion of income to a liquidity hub, or lending agreements can create a compound income model that goes beyond simple pledges, Solana may truly open up the value closed loop of DeFi. After all, the real ecological prosperity does not lie in the digital accumulation of funds in the pledge pool, but in the formation of a perpetual cycle between lending, derivatives, and combination strategies - this may be the "Goldbach conjecture" that "Ethereum killers" need to jointly crack.