After an initial minting peak, stablecoins are starting to flow out of Solana. The network initially received additional USDC, gaining over $12B in stablecoins.
The stablecoin supply on Solana is decreasing after peaking at above 12B tokens. Most of the inflows came from USDC adding billions in liquidity over the past few weeks.
In the past week, Ethereum added another $1.1B in stablecoins while Solana liquidity shifted as stablecoin issuers slowed down new token creation, and some tokens left the ecosystem. Over the same period, Solana decreased its total supply of USDC and USDT by 772M tokens.
Ethereum, Solana, and Base are still the top chains with net flows over a three-month window, though shifts are happening in the past week. USDC retains a supply of 56.46B tokens, as the minting slowed down since February 9.
Solana meme activity slows down
Solana gave all the signs of a meme super cycle, recently inviting bullish levels of stablecoin inflows. However, the high-risk trades and token crashes led to skepticism about the SOL-based ecosystem.
Additionally, both USDT and USDC are constantly adjusting their activity. Both tokens expanded their supply in the past month, but the markets are now looking at a shift in the trend. As a result, Solana now carries $11.57B in total stablecoins, while also seeing a general outflow of value locked.
The SOL-based ecosystem retains $8.77B in total liquidity, of which Raydium retains $1.56B. The most active DEX lost 40% of its liquidity in the past 30 days, despite going through the most active period of meme token trading. The ecosystem now enters a fifth consecutive week of DEX volume decline. During this period, high-profile launches absorbed most of the liquidity, while other coins and tokens lagged.
Raydium lost some of its activity to Meteora, which increased its vaults to $1.22B. Meteora itself owes a big part of its liquidity to the TRUMP-USDC pair, which holds 3.11% of the entire USDC supply on Solana. TRUMP rallied to over $24 in the past week, later sliding to $17.68. If the token slows down further, it may lead to additional outflows of USDC.
Meteora saw a record increase of its trading activity in the past weeks, attracting users for the ability to launch USDC-based trading pairs. The exchange was part of the reason for the growing inflows of stablecoins. Meteora only rallied after the appearance of celebrity and official meme tokens, while SOL-based pairs remained on Raydium.
The slowing liquidity is affecting all other DeFi protocols on Solana. Kamino Lend saw a relatively smaller outflow of value. However, Solend lost 45% of its value, down to $268M.
The Solana chain supporters claim recent economic activity is a better metric than value locked. Stablecoin liquidity, however, reflects the overall health of the chain.
USDC shows a shift in trench trading
Initially, new meme token launches depended on Solana. The new wave of official tokens, however, seek to build USDC liquidity. The ecosystem still has memes as its main use case, and a loss of trust can lead to additional liquidity outflows.
Token launches on Pump.fun are slowing down again, going below 40K new launches per day. The platform’s activity has reduced despite the recent launch of a mobile app.
Solana’s ecosystem has a weakness, where peak performance leads to an outflow of value. Even with stablecoin minting, the end game for traders is to remove money from the ecosystem.
The biggest value extractors on Solana are related to meme token trading. Bots took an estimated $1.09B, while MEV operators retained fees of up to $2B. Pump.fun produced and retained over $500M in fees, of which about 50% have been sold. TRUMP was also a rapid tool for value extraction, estimating up to $1B in value leaving the ecosystem in the hands of insider traders.
The available USDC in the ecosystem has made it even easier for traders to retain their earnings, while SOL remains relatively unstable. USDC remains a redeemable asset, which may also become the tool to cash out value from the Solana ecosystem.
