Solana flips Ethereum DEX volume with $55b

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

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

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

What’s driving Solana’s volume?

Solana’s landmark moment in surpassing Ethereum occurred under different circumstances for both networks.

Memecoins gained popularity on Solana’s chain last year, with projects like Dogwifhat (WIF) and Bonk (BONK) storming on-chain markets. Many speculative investors became overnight millionaires by betting on such tokens, which traded with billion-dollar market caps as of August 1.

Celebrities have also entered Solana, quickly bringing new tokens to market using tools like Pump.fun and Moonshot. Although most of these coins failed, the presence of public figures added momentum to the memecoin meta.

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

Ethereum’s defi role and institutional promise

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

Ethereum gained renewed interest following a technological upgrade that significantly reduced fees, making trading and swapping on Ethereum affordable again. The upgrade, called Dencun, was quickly followed by institutional demand for ETH on Wall Street. Issuers like BlackRock, Bitwise, Fidelity, and Grayscale received authorization from the SEC to list spot ETH exchange-traded fund shares.

Spot Ethereum ETFs have traded for about six days, with Grayscale outflows weighing heavily on the new offering. According to Nansen, $750 million exited products in the first four out of five trading days.

Debates abound about what the ETFs mean for Ether’s future price. One perspective suggests that supply dormancy caused by ETF buying will propel on-chain staking yields, while some argue against the development being regarded as an industry boon.

Regardless, on-chain data solidifies Ethereum as a DeFi market leader. Glassnode reported that daily active addresses on Ethereum and its L2s increased by 127% since the start of the year.