Solana (SOL) and Cardano (ADA) are the most popular competitors of Ethereum (ETH) in terms of market capitalization. Both offer solutions to the scalability problem of the blockchain industry’s leading altcoin. While ADA only suffered from the market downturn that affected other cryptocurrencies in 2022, SOL had to deal with this pressure as well as the collapse of FTX.
With the collapse of SBF companies, big altcoin proponent Solana lost more market capitalization than Cardano. However, this led to SOL experiencing significantly higher growth than the old cryptocurrency in 2023. Indeed, in January, ADA saw a 45% market appreciation. In contrast, SOL grew by 130% over the same period.
Both cryptocurrencies have risen for different reasons. Solana has been heavily impacted by the rise of the altcoin meme, Bonk (BONK). With the token on the altcoin network increasingly sought after by new investors, movement on the SOL blockchain was very high.
On the other hand, Cardano has grown excitedly around versions of its blockchain, such as non-synthetic 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 cryptocurrencies can be seen in the decentralized finance (DeFi) sector. Solana saw her Total Locked Value (TVL) rise from $206 million at the start of January to $264 million at the end of the month. According to data from DeFiLlama, Cardano’s TVL has increased from $48 million to $74 million. Although ADA’s growth in this area has been higher, largely due to a lower TVL than SOL, the increase in competition has also been significant.
Unfortunately for Solana enthusiasts, the cryptocurrency could not sustain this growth. Its TVL has suffered considerable declines in recent days due to the disinterest in Bonk, an altcoin that has successfully increased the volume of decentralized exchanges (DEX) on the SOL blockchain.
Speaking of DEX on Solana, they are also experiencing a slowdown. On February 10, the trading volume on these exchanges had decreased to $41.58 million, which is a 27% drop from the previous month. While its DEXs have grown in popularity with investors and traders, the recent downturn could indicate a move towards alternatives from users.
Additionally, DeFi protocol Everlend Finance on Solana informed the community that it suspended its services due to insufficient liquidity, resulting in a 6% reduction in total value locked (TVL) in the cryptocurrency. The decline in demand for loan-related assets has contributed to this DeFi project crisis. The Everlend team said the DeFi product code will remain open for possible updates.
Is there room for Cardano?
This could be a good time for Cardano to expand into the DeFi market. In terms of TVL, it continues to take positive steps, with a total value of $102 million locked at the time of writing. One of the factors helping the smart contract platform maintain this momentum is the fact that it has not relied on meme speculation for its growth in 2023.
Stablecoins, while having their issues, are of far greater importance to an asset than just a token with a dog logo. Djed’s arrival marked Cardano’s presence in decentralized finance and could be an important catalyst for the altcoin’s TVL in an upcoming bull run. Moreover, the promise of decentralized oracles offering services similar to those of Chainlink could also contribute to the value proposition of the cryptocurrency.
But Djed was not the only surprise ADA holders had in Q1 2023. After all, Liqwid, a decentralized lending protocol, is also present on Cardano, helping its development in DeFi.
