What’s Going on with Solana (SOL)?

SOL has been dramatically underperforming, what is needed to turn it around?

In the Technical and On Chain note at the weekend we drew attention to SOL’s poor performance, concluding that, “It needs a new story, and fast.” In this note Ali looks at the reasons behind its rise and fall, the current competitive environment and valuations relative to the other coins and tokens.

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Summary

Solana’s revenue surge in early 2025 was largely a by-product of a speculative memecoin bubble rather than sustainable, diversified on-chain activity. While the network remains a leader in high-frequency, low-cost transactions, its overreliance on one volatile sector has left it vulnerable to sharp revenue swings.

Meanwhile, its absence in more resilient and scalable sectors, like perpetuals trading (“Perps”), where HyperLiquid has seized a commanding lead, raises questions about long-term competitiveness. With an 88x P/S multiple, Solana is priced for aggressive growth, yet its current revenue drivers are unstable, and its market share in key growth verticals is slipping.

Unless Solana can diversify its on-chain economy and capture long term, sustainable activity, the risk of multiple compression, and a corresponding decline in token value, remains high.