Solana DEX growth surges but fails to lift SOL price

Solana's (CRYPTO:SOL) decentralised exchange (DEX) activity has seen a significant surge of over 400% in the past week, driven primarily by the rise of meme coins on the platform pump.fun.  

This Solana-based meme coin creation tool has rapidly gained popularity, enabling users to launch "joke coins" for free.  

The platform's success has been so pronounced that on August 18, pump.fun-related transactions accounted for a staggering 70% of all activity on Solana DEXs, leaving only 30% for other transactions.  

This dominance illustrates how a single platform can dramatically shape the trading dynamics within Solana’s decentralised finance (DeFi) ecosystem.  

Despite the impressive surge in DEX trading volume, the broader user engagement on the Solana blockchain has not seen a corresponding increase.  

On the contrary, daily active addresses on Solana have dropped by 20% over the past week, reflecting a decline in overall network participation.  

This decrease in user activity has also led to a reduction in the network’s daily transaction count, which has fallen by 6% during the same period, according to data from Artemis.  

The impact of declining user activity and transactions on the network has been evident in Solana’s transaction fees and network revenue, both of which have dropped by 34%.  

This decline suggests that while there is a concentrated area of growth within Solana's ecosystem, it has not translated into broader network success or significant price movements for Solana's native coin, SOL.  

At press time, SOL is trading at $147.3, with technical indicators suggesting a potential short-term rally.  

The MACD line is positioned to cross above the signal line, a signal often associated with a shift from a bearish to a bullish trend.  

If this momentum continues and demand increases, SOL could reach $148.27.  

However, if buying pressure diminishes, the price could fall to $133.64.  

The situation underscores the challenges Solana faces in turning niche growth areas like pump.fun into widespread network success.  

While the rise in DEX activity is noteworthy, the overall decline in user engagement and network revenue suggests that Solana's ecosystem needs more than just isolated successes to drive significant and sustained price growth for SOL.  

At the time of reporting, the Solana price was $142.13.