Solana flips Ethereum DEX volume with $55b

Solana has surpassed Ethereum in monthly decentralized exchange (DEX) trading volume for the first time in crypto history.

According to DefiLlama, Solana (SOL) DEX volume reached $55.8 billion in July, outpacing on-chain trading activity on Ethereum (ETH) between July 1-31.

Ethereum, the largest chain for decentralized finance, recorded $53.8 billion during the same period. Layer-2 networks like Arbitrum and Base and L1 blockchain Binance Smart Chain accounted for the most volume after Solana and Ethereum.

Monthly DEX volume as of August 1 | Source: DefiLlama What drives Solana’s volume?

Solana’s surpassing of Ethereum occurred under different circumstances for each network.

Memecoins have gained popularity on Solana’s chain over the past year, with projects like Dogwifhat (WIF) and Bonk (BONK) taking the on-chain market by storm. Many speculative investors have become overnight millionaires by betting on such tokens, which are trading at billion-dollar market caps as of August 1.

Celebrities have also jumped on Solana, using tools like Pump.fun and Moonshot to quickly bring new tokens to market. While most of these coins failed, the presence of public figures has helped fuel the memecoin meta.

Asset managers such as VanEck have filed with the U.S. Securities and Exchange Commission to list shares of the spot Solana ETF. However, Robert Mitchnick, BlackRock’s head of digital assets, said listing a basket of crypto ETFs beyond Bitcoin (BTC) and Ethereum seemed unlikely.

Ethereum’s Defi Role and Enterprise Promise

Conversely, Ethereum remains the go-to application layer for building decentralized applications. The largest dapps like Aave and Uniswap were initially native to Ethereum.

Ethereum has seen renewed interest following a technological upgrade that significantly reduced fees and made trading and exchanging on Ethereum affordable again. The upgrade, called Dencun, was quickly followed by institutional demand for ETH on Wall Street. Issuers such as BlackRock, Bitwise, Fidelity, and Grayscale have received SEC authorization to list shares of spot ETH exchange-traded funds.

Spot Ethereum ETFs have been trading for about six days now, with Grayscale exits adding a hefty chunk to the new offering. According to Nansen, $750 million worth of products have exited in the first four of five trading days.

There is plenty of debate over what ETFs mean for the future price of Ether. One viewpoint suggests that the supply slack caused by ETF buying will increase on-chain staking returns, while others argue against viewing the development as an industry boon.

However, on-chain data solidifies Ethereum as the DeFi market leader, with Glassnode reporting that daily active addresses on Ethereum and its L2s have increased by 127% since the beginning of the year.

Daily active Ethereum address data | Source: Glassnode