The Solana ecosystem showed that meme token fatigue was a temporary period. Trading expanded in July, rivaling the Ethereum chain.
The Solana ecosystem rivaled activity on Ethereum, as decentralized trading volumes boomed in July. The effect was partially due to the Raydium DEX, which continues to draw in new meme tokens.
Additionally, Ethereum’s DEX activity is shifting to other networks, especially Base. The Uniswap DEX remains the most important app on Ethereum and it increasingly draws traffic from Base and Optimism.
DEX still contributes around 15% to 20% of all DeFi value, and are lagging behind centralized exchanges. Yet growth in that sector shows more sustainable demand. DEX activity is still lagging behind the 2021 peak, but has successfully introduced a new selection of tokens.
The main source of Solana active users and liquidity is the Raydium DEX, one of the main sources of liquidity for both new and established tokens. Raydium contributes around $800M in daily trades.
Raydium also produces $13.18M in weekly trading fees, surpassing Uniswap with $10.4M. On a longer time frame, Raydium trading volumes are still lower than those of Uniswap. However, the Raydium DEX posts higher positive revenues of $559M in a week.
🚨 Solana is on FIRE! 🔥
Monthly DEX volume just surpassed Ethereum for the first time EVER, hitting $55.8 BILLION! 🤯 Memecoins are fueling the surge, but this is about more than just hype.
Is Solana the future of DeFi? The market seems to think so👀 #Solana #DeFi #Crypto pic.twitter.com/NGiETGL4Av
— Daniel Kozin (@KozinDk) August 1, 2024
Solana tokens ‘graduate’ to Raydium
Raydium drives the growth of Solana’s decentralized trading, but the primary launchpad for tokens is Pump.fun. On that platform, even the smallest tokens can launch with a basic liquidity pool. Most new assets start off as Pump.fun tokens, later moving on to Raydium. The larger DEX is used by projects that can afford to launch their asset and supply it with liquidity.
The Solana ecosystem saw the launch of around 1.5M new tokens, usually through Pump.fun or Moonshot. On average, 200 new tokens appear every day, and estimates see just under 2% graduating to Raydium.
Even the small-scale trading and new launches on Pump.fun are adding to the fees on Solana. The metric is seen as a positive development, but for others, it is a drain on available liquidity, which ends up wasted as fees.
Ethereum lags due to shift to L2 networks
The DEX advantage of Solana may be only for the short term, but it sets the pace for more heated competition with Ethereum. Solana apps and mainnet fees also surpass Ethereum on selected days, accelerating the trend of catching up.
In the past weeks, low Ethereum activity and a shift to L2 usage also meant cheaper fees. At the same time, Solana fees are up to 4X higher compared to the end of 2024, mostly due to more competitive on-chain activity. This adds to the days when Solana is the chain with the higher fees, in addition to a higher number of active users.
Solana showed growing on-chain competition and surpassed Ethereum in terms of fees at the end of July. Fees rose due to the need to bypass MEV bots, and also included tips to validators to guarantee block inclusion.
Solana still lags on stablecoin supply
The patterns of Solan DEX trading mostly reflect meme coin activity, where SOL is the baseline asset for the pair. The Solana ecosystem still carries a much lower value locked in pools. Liquidity on decentralized exchanges is estimated at around $1.2B. At the same time, Solana carries a small supply of native stablecoins compared to Ethereum.
Solana DEX trading has some stablecoin inflows from other chains, but the effect on meme tokens is limited. New token pools are quickly launched with a SOL collateral.
Other DeFi sectors like lending are lagging on Solana, and only Raydium compensates with 10X growth in the past months. Solana carries equivalents of most types of DeFi seen on Ethereum, with the exception of yield protocols. In the past months, SOL was also flowing into liquid staking, especially to the staking opportunities of JitoSOL.
Despite the recent performance, SOL market prices backtracked and once again slipped below Binance Coin (BNB) in terms of market capitalization. SOL traded at $164.35 after a market-wide correction. So far, Solana has managed to shake off most of the criticism, while managing to compete with highly active L1 and L2 chains and regaining prices close to $200.
Cryptopolitan reporting by Hristina Vasileva
