Solana struggles to reach $100: Will Aave come to its rescue?

  • Open Interest in SOL fell to $1.14 billion as the price remained below $100.
  • Aave will reportedly deploy its v3 on Solana.

The price of Solana [SOL] found it hard to retest $100 on the 15th of January, despite clearing the path when the year began. At press time, SOL changed hands at $97.85. This value represented a 3.60% decrease in the last seven days.

Like the price action, the Open Interest (OI) of SOL has decreased as well. AMBCrypto checked out Coinglass’ data and discovered that the OI was $1.14 billion at press time.

Interest in trading SOL falls

This was a significant decrease from what the OI was last Christmas. On the 25th of December 2023, the OI surged to $120.96 billion.

The increase, at the time, indicated a rise in open contracts connected to the token. But as of this writing, the decline in OI was a sign that longs are no more aggressive but now cautious. It was also an indication of a decrease in net open positions.

SOL futures Open Interest

Source: Coinglass

When placed alongside the price action, the OI signaled a possible weakness for the SOL uptrend. However, there has been a notable development around Solana that could impact the cryptocurrency’s value. But this time, it involved Aave [AAVE].

On the 15th of January, the Aave community, through Neon Foundation, proposed the expansion of the lending and borrowing protocol to Solana.

Aave keeps tabs on SOL

According to the proposal, Neon’s compatibility with the Solana blockchain could give Aave access to some of Solana’s liquidity.  It suggested that Solana’s revival, coupled with Aave’s prominence in DeFi, could make a good combination.

However, Aave noted that the proposal would not only involve SOL but,

“Three collaterals (SOL, mSOL, jitoSOL 1) and one borrowable asset (USDC) with no isolated mode, e-mode enabled for correlated assets (SOL, mSOL, jitoSOL), conservative LTV and supply, borrow caps.”

If the Aave community approves the proposal, Solana’s adoption might increase. Also, if traction on the network increases, it is possible for the price to also follow.

Considering the Development Activity, AMBCrypto noticed that the metric rose to 10.18 on the 12th of January. This increase was proof that new features were being shipped out on Solana.

However, the Development Activity, at press time, had decreased to 8.37.

This drop indicated that developers’ commitment to polishing the blockchain had decreased. Should the metric continue to drop, SOL’s price could also be affected.

This is because market players might deem the decrease as a sign that developers were not bullish on the project in the short term.

Solana development activity and Weighted Sentiment

Source: Santiment

How much are 1,10,100 SOLs worth today?

This perception was also evident in the Weighted Sentiment. As of this writing, the Weighted Sentiment was in the negative region, at 0.261. Weighted Sentiment shows the positive/negative commentary around an asset.

So, the reading implied that the average market player was not bullish on Solana.

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