Hype Isn't a Moat: Solana's Wall Street Story Is Hard to Tell

By Suvashree Ghosh, Bloomberg

Translated by Saoirse, Foresight News

As the blockchain with the highest trading activity globally, it would seem poised to easily captivate Wall Street, but Solana’s story is far from simple. Much of its early prominence was built on various meme coins and tokens capitalizing on Donald Trump-related hype.

The chain received early investment from Sam Bankman-Fried (SBF) and was once hailed as the crypto industry's next major trend. When FTX, SBF's exchange, collapsed in 2022, Solana weathered the crisis. Riding a wave of meme coin popularity, it returned to the spotlight, though its business became highly dependent on speculative trading.

Over recent weeks, demand for Solana's native token, SOL (one of the few survivors among the so-called "Sam Coins" backed by SBF's funding), has continued to weaken, with the token down nearly 20% year-to-date.

Meanwhile, U.S.-listed spot and staking SOL ETFs recorded a combined $50 million in outflows over two consecutive weeks this month. Digital asset manager SkyAI also liquidated its entire SOL holdings this month, abandoning its previous positioning to pivot fully toward the AI sector.

"The biggest risk is assuming that current trading fervor guarantees long-term competitiveness," said Michael Weisz, CEO of Solana ecosystem lending platform Kamino.

Solana Lags Among Top Cryptocurrencies

As Wall Street continues to deepen its involvement in crypto, the industry's focus is shifting. Applications more aligned with traditional finance, such as dollar stablecoins and tokenized real-world assets, are becoming mainstream. While Solana's long-term investment value remains debated, it has actively positioned itself in this space and made progress in scenarios like tokenized stocks.

An overall bearish crypto market has further amplified its challenges. Following a short-term rally triggered by Trump's election victory, prices have continued to retreat, making it difficult for most tokens to recover their losses. Speculative capital has shifted toward AI-related yields, while a new wave of emerging blockchains in vertical niches has risen, becoming direct competitors to Solana.

The Solana Foundation, a non-profit organization based in Zug, Switzerland, that supports the network's development, stated that its transformation efforts are underway. Foundation Chair Lily Liu noted that institutions moving real-world funds and tangible assets on-chain has become the chain's fastest-growing use case. She added that Solana's high speed and low fees are sufficient to support large-scale global payments and capital markets operations.

At launch six years ago, Solana's core selling point was its faster speeds and lower costs compared to competitors, particularly Ethereum. However, this characteristic also made it naturally suited for speculative trading, which remains the primary source of revenue for the chain today.

Lucas Tcheyan, Research Vice President at Galaxy Digital, pointed out: "Compared to Ethereum, Solana's fee revenue relies more heavily on speculative trading, and it has experienced a sharper decline from its 2025 peak." He also mentioned that Solana's current goal is to encourage users to migrate more financial activities on-chain, encompassing trading, savings, and payments.

The chain's ecosystem structure is diversifying. According to a report by Galaxy Research, the share of meme coin trading volume has dropped from over 50% at the end of 2024 to 15%–20% in the second quarter of this year.

The Solana Foundation noted that major financial institutions, including JPMorgan Chase, Morgan Stanley, and Standard Chartered, are already conducting business on the network.

Leading payment processors like Visa and Fiserv have also chosen Solana. Western Union issued the USDPT dollar stablecoin on the Solana chain in May this year.

Recently, however, the business segments Solana aims to capture are increasingly being siphoned off by competitors.

Hyperliquid has emerged as a popular platform for on-chain perpetual swaps. Perpetual futures carry no expiry dates, allowing traders to bet on the price movements of cryptocurrencies, stocks, and commodities. According to data from Tcheyan, within a year of Hyperliquid's issuance of the HYPE token, Solana's share of on-chain perpetual contract trading volume fell from 17% to 6%.

On the other hand, Ethereum remains the foundational bedrock of decentralized finance. Robinhood Chain and Coinbase's Base are both layer-2 networks built atop Ethereum, while Tempo, incubated by Stripe in partnership with Paradigm, and Binance's BNB Chain are independent public chains compatible with the Ethereum ecosystem.

Solana itself continues to iterate. On October 21, the network completed the Alpenglow upgrade, further boosting transaction speeds. However, the value of such technical improvements is only realized if they succeed in retaining users and liquidity during a bear market.

Weisz added, "Growth truly reverses when high-quality assets, developers, and customers choose to leave because other platforms offer a better experience."