Every Layer-1 rally creates more than price appreciation, it redistributes wealth across its ecosystem. The pattern is becoming familiar: as the base token rips, liquidity cascades into DeFi, DEXs, and the next generation of native plays. We saw this blueprint unfold during Solana’s late-2024 to early-2025 boom, and the same mechanics now appear on the BNB Smart Chain. Albeit with different drivers of price, the recycling looks similar to Solana last year. 

Whether or not the recycling continues is decided by (i) somewhat sustainable BNB price levels and (ii) limited BSC outflows, both which are worth keeping an eye on over the next few days.

The parallel becomes clear when comparing both cycles, as Solana and BNB rallied, memecoin activity on each chain surged almost in lockstep, reflecting the same wealth-effect feedback loop playing out in real time.

The simple logic of the L1 wealth effect

When a base-layer token like SOL or BNB rallies, holders of that asset become wealthier in USD terms and that surplus doesn’t sit idle. It gets recycled into the surrounding ecosystem: traders rotate profits into higher-beta DeFi tokens, liquidity pools attract new deposits, and activity accelerates as users chase yield or new launches.

It’s a simple feedback loop, price gains create liquidity, and liquidity sustains price, until new inflows slow or wealth leaves the chain entirely. This “L1 wealth effect” is something we saw last cycle on ETH and more recently on SOL. It happens on most L1s but stands out most on bluechip L1s due to the sheer amount of $ increase. It seems to be BNB/BSC’s turn now as it overtook XRP as the #3 largest by marketcap.

Blueprint: Solana

Solana’s rally from October 2024 to February 2025 defined the template. Catalyzed by the emergence of a new retail-led meme narrative, centered on tokens like BONK, WIF, and MYRO and reinforced by improving network performance and record-high on-chain activity, SOL’s surge became the clearest example of narrative-driven wealth creation. Liquidity flooded into Solana’s DEXs and perps, stablecoin balances expanded sharply, and protocols within the ecosystem such as JUP, PYTH, and JTO were pulled higher by association rather than new fundamentals.

What set it apart was how long the wealth effect lingered. Even after momentum cooled, volumes, TVL, and fees held at structurally higher levels, with staking yields and user activity stabilizing instead of collapsing. Rather than unwinding, Solana’s liquidity loop slowed gracefully, showing that capital largely recycled within the network instead of exiting it. That self-contained dynamic extended the rally’s lifespan and left a healthier post-cycle baseline for the ecosystem.

Replication: BSC

Fast-forward to mid-2025, and the BNB Smart Chain is running the same playbook, albeit with different catalysts. BNB’s rally, fueled by gas-fee cuts, RWA incentives, and liquidity programs, ignited a wave of on-chain activity as capital rotated into yield and meme sectors, CAKE, THENA, HONEY, and MANTA among the main beneficiaries. Momentum was further amplified by the Aster perp DEX wars and CZ’s renewed push to champion BSC, drawing fresh liquidity and narrative energy back to the chain.

What’s notable is the recycling of capital from other chains, particularly from mature Solana positions. BSC’s rally has been meme-led and liquidity-driven, but the sequencing, L1 first, DeFi second, everything else third, tracks almost identically with Solana’s prior wave. As long as that loop keeps spinning and bridged TVL remains elevated, the wealth effect stays alive.

Liquidity multipliers and timing windows

These cycles have a rhythm. When an L1 appreciates sharply, its holders feel richer, take on more risk, and fuel on-chain activity that amplifies returns. That feedback loop, from price to liquidity to secondary token performance, typically unfolds over two to three months before flattening.Solana’s wave lasted roughly one quarter before cooling. BSC is now reaching that same stage: activity is easing slightly, but it’s not reversing.

The key distinction lies in the direction of flows. As long as BNB prices hold near highs and bridged capital doesn’t leave, recycling will continue, liquidity will simply rotate between sectors (memes → DeFi → yield) instead of exiting the chain. Only when outflows accelerate or confidence breaks does the loop truly end.

Signals of sustainability

At this stage, outflows matter more than momentum. If capital remains within BSC, migrating between protocols rather than leaving entirely, the wealth effect can persist even amid slower trading. This internal rotation, profits flowing from speculative tokens into yield farms and stable liquidity, mirrors the late stages of Solana’s 2025 run.Conversely, if we start to see sustained bridge outflows or declining stablecoin balances, that would signal the cycle’s exhaustion and the beginning of rotation toward the next chain.Right now, the data still leans constructive. Activity is off its highs post -ve price activity on memes in the last 12-18hrs, but liquidity and engagement remain robust, suggesting that the ecosystem is recycling rather than bleeding. The dynamic persists, not at its peak, but in a stable, self-funding phase that can still run further if prices stay resilient.

Takeaway: It likely rhymes

History doesn’t repeat perfectly, but crypto market structures often rhyme. Solana proved that an L1 rally can transform price gains into sustained ecosystem liquidity for months, as long as capital stays put. BSC now shows the same behavior: wealth circulating within the chain, bridging inflows steadily, and users still rotating between narratives.

Conclusion

The wealth effect doesn’t die when volumes slow, it ends when money leaves.

If BNB holds its ground and outflows remain muted, the recycling dynamic that fueled Solana’s rally should persist on BSC too. Until that changes, the narrative isn’t over completely over, it's just evolving.