Solana DEX Volumes Surpass Ethereum, But Network Activity Drops 91%

Solana's decentralized exchange (DEX) volumes have 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 remains significantly lower than the levels seen in January, and the appeal of the memecoin sector, which has been a key driver of Solana's growth, continues to fade.

DEX activity on Solana reached $64.1 billion over 30 days, surpassing Ethereum’s $61.4 billion. Key contributors to this growth include Raydium, Pump.fun, and Orca, which accounted for $19.1 billion, $14.2 billion, and $13.9 billion in volume, respectively. Despite this growth, overall DEX activity on Solana remains 91% below January levels, indicating a significant decline in network activity.

The memecoin sector, which has been a significant driver of Solana's growth, has seen a decline in appeal. Most memecoins have lost 25% or more in value over the past 16 days, with tokens such as Giga, Popcat, Fartcoin, PNUT, Bonk, and WIF experiencing significant declines. This decline in the memecoin sector has dampened enthusiasm about Solana's rising DEX market share.

Another concern for SOL investors is the rise of Hyperliquid, which has emerged as the dominant blockchain for perpetual trading. 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. This shift has reduced interest in both Ethereum layer-2s and standalone decentralized applications (DApps) on Solana and BNB Chain, weakening traders' conviction that Solana can become the dominant player.

In derivatives markets, demand for leveraged long positions in SOL has diminished, indicating a loss of confidence in Solana's long-term prospects. 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 annualized 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, and 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. However, the overall decline in network activity and the rise of Hyperliquid pose significant challenges to Solana's long-term prospects.