In a surprising turn of events, the Solana network has outpaced Ethereum in monthly decentralized exchange (DEX) volume for the month of July, according to data from DefiLlama. Solana’s DEX transactions reached an impressive $55.8 billion, surpassing Ethereum’s $53.8 billion for the same period. This marks Solana’s second-highest monthly volume, with March 2024 holding the peak at $60.7 billion.
Solana’s volume spike can be attributed to the increased activity on platforms like Raydium, Orca, and Phoenix. On the other hand, Ethereum’s volume is mainly driven by the Uniswap exchange. Despite Solana’s impressive numbers, Ethereum continues to hold the title of the leading DeFi platform, commanding around 61% of the market with a total value locked (TVL) of $67 billion. In comparison, Solana only holds 4.64% of the market share, with a TVL of $5.16 billion.
Analysts have pointed to the rise in memecoin activity as a significant driver behind Solana’s increased DEX volume. The blockchain has seen a surge in various memecoins over the past year, ranging from cat-themed tokens to politically inspired ones. This growth has led to increased liquidity as traders seek to capitalize on these assets. Institutional endorsements have also played a role in fueling interest in Solana, with speculation around a potential Solana exchange-traded fund (ETF) further boosting its growth.
Market analysts have noted a significant increase in the usage of stablecoins on Solana. Data from Visa’s stablecoin dashboard shows that the transaction volume for USDC on Solana has exceeded $8 trillion since last year, with USDT on the Tron blockchain following closely at $6.5 trillion. This surge in stablecoin usage indicates a growing interest in the Solana ecosystem.
Despite Solana’s recent success in DEX trading, there are concerns about potential wash trading on the platform. A report by the pseudonymous crypto analyst Flip Research suggests that 93% of transactions on the blockchain are inorganic. The report highlights that Solana’s daily transactions are heavily influenced by wash trading, MEV bots, and scams, which may offer little value to retail traders. Flip Research pointed out the presence of bots generating fake volumes independently, raising questions about the authenticity of the trading activity on Solana.
While Solana has shown remarkable growth in DEX volume and garnered significant attention from traders and investors, the platform still faces challenges in ensuring the integrity of its trading activities. Monitoring and addressing concerns around wash trading will be crucial for Solana to maintain its momentum and reputation in the decentralized finance space.
