Solana DEX Volumes Surpass Ethereum, But Memecoin Slump Dampens Enthusiasm

Solana's decentralized exchange (DEX) volumes have recently surpassed those of Ethereum, securing the second position in the market. This development has sparked discussions among traders about the potential for Solana's native token, SOL, to reclaim the $180 level in the near term. However, overall network activity on Solana remains significantly lower than the levels seen in January, with DEX activity 91% below its peak. Key contributors to Solana's recent growth in DEX volumes include Raydium, Pump.fun, and Orca, which have collectively driven $47.2 billion in volume over the past 30 days.

Despite this positive trend, the appeal of the memecoin sector on Solana has been waning. Most memecoins have lost 25% or more of their value in the past 16 days, with notable declines in tokens such as Giga, Popcat, Fartcoin, PNUT, Bonk, and WIF. This decline in memecoin popularity has dampened enthusiasm for Solana's rising DEX market share. Additionally, the emergence of Hyperliquid as the dominant blockchain for perpetual trading has reduced interest in both Ethereum layer-2s and standalone decentralized applications (DApps) on Solana and BNB Chain. Hyperliquid's 30-day trading volume was 84% higher than the combined total of its five largest competitors, fueling speculation that other projects may launch their own independent blockchains, potentially including major Solana-based DApps such as Pump.fun.

This shift in market dynamics has weakened traders' conviction that Solana can become the dominant player. The loss of confidence is evident in derivatives markets, where demand for leveraged long positions in SOL has diminished. In a neutral market, perpetual futures typically show an annualized funding rate of 5% to 12% for long positions. However, over the past 30 days, derivatives data shows no sustained optimism for SOL, with the funding rate turning negative at times, signaling bearish sentiment. The biggest potential catalyst for SOL remains the possible approval of a Solana spot exchange-traded fund (ETF) by the US Securities and Exchange Commission, with a decision expected in October. Until then, bulls are counting on the network’s technical strengths to support price recovery.

Solana's robust base layer supports "asset availability," meaning tokens can be natively used as collateral. The absence of an "offchain matching engine" helps protect DEX users from transaction reordering or prioritization. Despite its association with memecoins and token launches, Solana's ecosystem has broader use cases. While Hyperliquid may be an outlier, other upstart blockchains, such as Berachain, have failed to maintain meaningful deposit levels. Considering Solana’s low fees and high scalability, a return to the $180 mark could happen even before the ETF decision in October.