Solana OI and Funding Plunge as Price Collapses — Lower Liquidity, Higher Downside Risk

Solana (SOL) has seen a substantial deterioration in derivatives and market metrics as price fell more than 71% from its January 2025 peak of $291. Perpetual open interest (OI) dropped from a post‑peak high of $17.1 billion to about $4.89 billion, indicating a collapse in futures participation and speculative leverage. The weighted funding rate has fallen from 2025 highs to its lowest level in over a year and has been frequently negative, meaning shorts are paying longs and reflecting dominant bearish conviction. Earlier reporting also flagged heavy negative funding (annualized ~20% in one dataset) and falling on‑chain activity: weekly Solana dApp revenue declined to multi‑month lows, with memecoin launchpads accounting for a large share of remaining fees. Institutional flows remain limited compared with competitors (Solana ETFs ≈ $2.1B AUM vs Ethereum ≈ $15.8B). For traders, the twin collapse in OI and funding suggests reduced leverage‑driven volatility and thinner liquidity — which raises downside risk if selling continues and makes sustained short squeezes less likely unless funding and sentiment flip positive. Key trading takeaways: SOL is deeply below its ATH, futures liquidity is significantly reduced, funding is often negative, on‑chain revenue and incentives are weakening, and a breach of key support levels could accelerate declines.