Solana DeFi Dominates Liquidations Amid SOL’s Market Meltdown—Here’s How
When SOL prices tanked last week, Solana's DeFi ecosystem didn't just weather the storm—it feasted on the wreckage. Liquidations surged as overleveraged traders got steamrolled, and protocols like Marginfi and Kamino vacuumed up collateral faster than a Wall Street hedge fund dumping retail positions.
The mechanics: Solana's sub-second block times and near-zero fees let DeFi protocols trigger liquidations before traders even saw the red candles. No mercy, no delays—just cold, algorithmic efficiency.
Meanwhile, centralized exchanges fumbled with manual processes. Imagine needing human approval to margin-call a degenerate gambler in a 24/7 market. Cue the tiny violin.
Bottom line: Solana's DeFi stack isn't just competing with TradFi—it's lapping it. Next time markets crash, expect more blood in the water... and more sharks ready to feed.
SOL activity shifts to decentralized protocols
Following the latest round of liquidations, SOL open interest on major exchanges fell by over 7%. Binance remains the top market for centralized exchanges on Solana.
Drift Protocol is currently the biggest on-chain perpetual futures exchange for SOL, with over $1.19B in total value locked. SOL open interest also reached a new peak on Hyperliquid, with over $1.2B in open positions. SOL is one of the smaller markets on Hyperliquid, but it turned responsive as the asset returned close to $200.
Open interest is back to $4.98B, as traders started rebuilding their long positions. However, long positions are rebuilding to levels as low as $175, while short positions stop at just above $200.
As a result of growing on-chain activity, Jupiter and Jito are back among the top 10 fee producer apps. Solana fees are also back to between $1M and $2M daily, despite only having 2.3M daily active users.
In the past week, the Solana ecosystem also saw inflows from other chains, with nearly half the inputs coming from Ethereum. Solana stablecoins are back above $12B, with over $10B in liquidity locked in decentralized protocols.
Solana DeFi is still relatively small, though Kamino Lend has been growing actively, with over $3B in value locked. Solana’s on-chain activity is slowly shifting to multiple forms of DeFi, going beyond meme tokens.
Solana whales turn to short positions
Following the latest liquidations, Hyperliquid whales rebuilt short positions on Solana. As of August 18, 59 whales were long on SOL, while 70 shorted the asset.
The White Whale is one of the high-profile traders with a bullish SOL outlook. Currently, the trader holds a 20X Leveraged long on SOL, with a notional value of $79M. The position carries a $1.22M unrealized loss, with a liquidation price at $154.59.
The WHITE Whale was also among the first to call for rebuilding long positions, expecting a market recovery.
SOL sentiment is generally more cautious and bearish for both retail and smart money. SOL was one of the weakest assets in the new week, where all blue chips sank. However, the expectations of high-risk traders are for SOL breaking out with a ‘hate rally’.
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