Solana Grew This Key Metric by 198% in 1 Year, But Is It a Buy?

Key Points

• Solana’s ecosystem is increasing in value rapidly.

• That suggests there will be plenty of demand for the coin.

• There’s also a big new growth driver that’s starting to pick up speed even more than before.

• 10 stocks we like better than Solana ›

Money that briefly passes through a platform says one thing about that platform’s value, but money that settles in and gets to work says something very different, and far more bullish, about both user conviction and the platform’s future cash flows.

On that note, more capital has decided that Solana‘s (CRYPTO: SOL) smart contracts and ecosystem projects are precisely where it belongs. Per data from crypto data provider Token Terminal, the chain’s ecosystem total value locked (TVL) is up by 198% over the last 12 months, reaching $38.5 billion. If you are wondering whether that strength says anything about where the coin’s price could go next, it likely does, so let’s investigate what’s going on here in more detail.

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On-chain value is rising fast

Let’s first clarify the main figures we’re discussing, so there’s less chance to get confused.

The ecosystem TVL metric measures how much capital users have deposited into all of a blockchain’s decentralized finance (DeFi) applications and smart contracts. It isn’t a perfect valuation tool, but it’s a very useful barometer for measuring sustained on-chain activity and also a portion of the demand for the native token, as the native token is required to pay network fees associated with managing users’ assets.

Again, the main idea here is that if the amount of capital in a chain’s ecosystem is rising over time, it speaks to confidence in the platform, and it also supports the idea that users are getting value from using the chain as a place to park their capital. So if users refuse to bring their capital to a network, it’s likely a sign that they don’t see the features they want there.

If you decide to investigate this metric yourself, be aware that different data providers count different elements as part of it, so the numbers will vary significantly. With that said, the calculation methodologies may differ, but they all agree on the same story, which is that deposits to Solana’s ecosystem have climbed materially (and meteorically) through 2025.

But why does the direction matter more than the exact quantities involved here?

In short, because persistent growth in locked capital tends to reinforce itself. More deposits seed more liquidity for decentralized applications (dApps) to offer to larger account holders, which in turn attracts more developers seeking to monetize potential capital flows, which then makes the network more useful for new users who bring new deposits, as operating at the larger scale often means requesting fewer fees per user. Solana’s rising base of on-chain dollars is part of that flywheel, as stablecoin value on the network is also trending much higher this year, reaching a sum of $13.2 billion.

A year of sharp ecosystem TVL gains suggests Solana’s apps are gaining mindshare and capital share at the same time, which suggests that it’s worth buying. A closely related issue is what will drive its next leg of growth, as capital won’t continue to flow unless there’s a good reason for it to.

The tokenized asset story is underway, too

Solana’s ecosystem will continue to get more valuable; the next big thing for the chain is for it to become a hub for tokenized real-world assets (RWAs), specifically stocks, money market funds, and bonds. Today, Solana has roughly $670 million of tokenized real-world assets, up by a strong 34% over the last 30 days. Growth in that figure is what could turn today’s TVL momentum into something more resilient.

This growth will likely continue, as the asset managers who issue RWAs like the promise of fast settlement times, round-the-clock markets, inexpensive fees, deep liquidity, and programmable compliance features. When high-quality assets like tokenized stocks and bonds live on a chain, they tend to bring sticky deposits and real fees. And that triggers the same flywheel effect we discussed earlier, which is already starting to happen.

Assuming that tokenized fund sponsors continue to flock to Solana, and assuming that the network’s developer tooling keeps lowering the friction for issuing and managing compliant assets, on-chain equities and credit instruments will likely represent the next pool of sticky deposits. There is of course a chance that regulatory hiccups will slow the pace of adoption, and there’s nothing to suggest that this opportunity is otherwise without risk. The RWA tokenization field is just starting to blossom, and there’s going to be a lot of competition, to say the least.

And that’s why Solana, while being worth buying today, is an investment that you shouldn’t simply size into without thinking. If you’re looking to build up a position to capture some of the upside here, be sure to start by dollar-cost averaging (DCAing) with a modest amount of money, and revisit the investment thesis as the RWA footprint scales.

There’s a bright future ahead for this chain. Just understand that it won’t get to that future without a few bumps along the way, even if the metrics indicate that its ecosystem is flourishing at the moment.

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Alex Carchidi has positions in Solana. The Motley Fool has positions in and recommends Solana. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.