Stakers are deactivating their Solana (SOL) deposits as price slides

Solana (SOL) stakers are taking some of their coins out of staking platforms and protocols. The recent price slide to the $130 range is accelerating the process. 

Solana (SOL) is losing stakers, with outflows both from its simple staking and from protocols. The unstaked SOL may put additional pressure on the market, as the asset sinks to the $130 range after the latest drawdown. 

In the previous month, withdrawals from staking slightly surpassed deposits. For the past two-day epoch, another 964,566 SOL left the simple staking pool. The chain sees smaller deposits, though the sinking price is making traders rethink the future of SOL. 

The biggest outflows come from whales holding 100K-250K SOL. Staking on Solana is mostly skewed toward large-scale owners, who want passive income, but have an interest in not crashing the price of the asset.

The overall staking share for Solana is down to 64.65%, from a peak above 69% at one point. The Solana chain aimed to build a DeFi sector with liquid re-staking, before memes took over as the main narrative. 

Unstaked SOL is now added to the expected inflows of new tokens from the March 1 unlock. The large stake comes from the wallets of FTX and will put 11.2M new SOL into the hands of multiple wallets. The SOL, used to repay some of the FTX creditors, may have an additional outsized effect on the market. 

Unstaked SOL is reaching exchanges

Some of the unstaked SOL is reaching exchanges, as in the case of a recent whale unstaking 96,155 SOL. The assets, valued at $13.49M, were sent to Binance in a series of transactions. The whale staked SOL at a price of around $101 a year ago. The current stake is large enough to sway the market on Binance, as the SOL liquidity is $3.4M for the 2% market depth. 

Following the unstaking and general worsening sentiment, SOL traded at $138.13. Trading volumes remain relatively high at $11.6B in the past day as selling accelerated. In the past 24 hours, SOL had the largest liquidation event since 2023, and has already fallen over 50% from its recent peak. SOL is at a decision-making threshold, potentially sinking lower to the support levels from 2024. 

At the current stage, SOL is also showing signs of being oversold, pointing to a potential reversal. Most exchanges see slower SOL activity, but Bybit has become an outlier. Just days after its recent hack, SOL volumes on Bybit doubled, mostly linked to leveraged trading and liquidations. 

Large Solana protocols lose both stake and revenue

Some of the largest Solana protocols are seeing the initial stages of staking outflows. Even the leaders JitoSOL and Helius Labs registered slower inflows. 

In the case of JitoSOL, the depositors and stakers are in balance, but activity has slowed down. The withdrawals are starting to increase, while fees for JitoSOL are decreasing from their peak. 

In the past month, a large part of SOL staking has moved to Binance, which offered more convenience. Staking on Binance also issues the highly liquid BNSOL token, which is currently trading at a slight premium of $143.40. However, BNSOL is less liquid and is prone to slippage.

SOL in liquid staking protocols also reached its peak and started posting outflows even from the biggest and most successful protocols. 

The other argument for Solana is that in the past months, it has been the chain with the biggest economic activity. Solana apps produced some of the biggest revenues, though not all shared the fees with users. The trend has already broken down, as almost all apps are now returning to baseline. After weeks among top earners, Pump.fun, Raydium, Orca and other top Solana protocols are now down to the top 20 of fee producers. 

Meteora and Circle remain near the top, as Solana trading shifts to using USDC as its main asset for new pairs. The lowered demand for SOL in the meme token market is also weighing down on the price. SOL is also not as widely used for meme token bonding curves, which locked a significant part of the supply.

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