Solana Overtakes Ethereum DEX Volume: Is Ethereum Slipping?

• Solana’s DEX trading volume hits $1.3 billion, briefly outpacing Ethereum.
• Ethereum quickly reclaims its lead in DEX volume.
• Memecoin trades spur Solana’s temporary volume boost.

Thanks to its early start and network effects, Ethereum has long been the frontrunner in decentralized finance (DeFi). However, recently, Solana has experienced its own growth in that area, fuelled by its low fees and developer-friendly environment.

Last week, Solana once again exceeded Ethereum’s volume on decentralized exchanges (DEX), leading investors to ask questions about Ethereum’s long-term outlook. 

Solana’s DEX Lead Over Ethereum

On Friday, May 10, Solana briefly surpassed Ethereum in DEX trading volume, recording $1.3 billion compared to Ethereum’s $1.29 billion. The flipping was primarily due to increased trading activity on Solana, thanks to a renewed interest in memecoins.

In recent months, Solana has attracted a significant community of memecoin enthusiasts. Tokens like Bonk and DogWifHat have seen increases of upwards of 1000% since their launch. 

As noted in a recent analysis by Franklin Templeton , memecoin airdrops have received huge attention among the community. They also generated significant wealth effects, further contributing to interest. 

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However, despite Solana’s temporary lead in DEX volume, Ethereum quickly regained its top position by the end of the day, closing the day at $1.39 billion in volume. Conversely, Solana’s trading volume dropped to $943 million. 

Solana’s DEX Volume Is Not What It Seems

This was not the first time Solana flipped Ethereum in DEX volume. The last time this happened was on April 21, when Solana’s DEX volume was $1.4 billion, compared to Ethereum’s $1.16 billion. Before that, on March 16, Solana’s DEX volume was even higher, at $3.4 billion, against Ethereum’s $2.4 billion. 

It is important to note that high network volume does not mean the same thing for Ethereum and Solana. Due to its low fees, Solana attracts a significant number of high-frequency trades, which boost its overall volume. On the other hand, Ethereum’s higher gas fees mean that its users will only trade when it is advantageous. 

While their DEX volume is comparable, Ethereum still holds significant dominance regarding the network’s total value locked (TVL). Currently, Ethereum has a TVL of $52 billion, dwarfing Tron’s $8 billion and BSC’s $6 billion. Solana is only in fourth place in this metric, at a TVL of $4 billion. 

Even if Solana were to take the first spot in either DEX or network volume for good, it would still need to come a long way before it can grow to the size of the.

On the Flipside

• Solana has faced significant network issues in the past. Most recently, the chain has experienced network congestion , leading to a high transaction failure rate. 
• The reliance on memecoins and speculative trading may not be sustainable in the long term.

Why This Matters 

Even if Solana is still far behind, its rise challenges Ethereum to continue improving, particularly around scalability and transaction costs, two critical areas for user experience. 

Read more about Solana’s prospects to take third place among blockchain networks:
Here’s How Solana Can Outpace BNB and USDT: Franklin Templeton

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