Recently, Solana reached 1.8 billion dollars in daily trading volume on DEX: almost 30% of the entire decentralized crypto market.
According to the data from DefiLlama, it now directly challenges Ethereum from this point of view.
The volumes on DEX
The decentralized crypto market is still very far in terms of trading volumes compared to that of centralized exchanges.
For example, in the face of a daily volume on DEX on Ethereum of about 1.4 billion dollars, and about 1 billion on Solana, the sole centralized exchange Binance handles around 10 billion for the spot market alone.
However, these are growing volumes, given that a year ago Ethereum was more or less at the same levels, while the trading volumes on Solana were still extremely limited.
In the past, taking all the chains as a reference, the overall daily volume rarely exceeded 10 billion dollars, while since March it rarely falls below this threshold.
Solana vs. Ethereum
Note that the dominance of Ethereum in the last 12 months has decreased significantly, dropping from about 50% to less than 30%.
A year ago in second position for daily trading volumes on DEX was BSC, with about 16%, while Solana had to settle for just over 2%.
However, when in October 2023, the latest bullrun started, the volumes on Solana literally took off.
Already at the beginning of 2024, its dominance had risen to 17%, with Ethereum down to 31% and BSC at 12%, but it was with the boom in March that Solana’s dominance jumped to 28%.
By now both Ethereum and Solana travel with a daily dominance that remains around 28%, although that of Ethereum rarely drops below 25%, while that of Solana sometimes drops even below 20%.
The reasons for Solana’s jump
Solana indeed offers the crypto market higher transaction speeds and lower fees compared to Ethereum, but these are characteristics also offered by Ethereum layer-2 solutions like Arbitrum.
Among the layer-2 of Ethereum, it is precisely Arbitrum that is most used for exchanges on DEX, with a dominance, however, that does not exceed 17%.
On Solana, however, there are more active bots, and new tokens are continuously being launched, particularly memecoins.
So it is not just about technical advantages, but also about an ecosystem that is growing very quickly.
The technical problems
This true and proper boom in trading on DEX on Solana is also causing network congestion, leading to delays and high transaction failure rates.
For example, the DeFi derivatives platform on Solana Zeta Markets is already working on a layer-2, Zeta X, to improve performance, with the goal of limiting latency to 3-5 ms, and handling up to 10,000 TPS (transactions per second).
Among other things, Zeta Markets offers an advanced Central Limit Order Book (CLOB) on Solana, with rapid order matching and minimal costs, already used by over 100,000 users.
The enormous and rapid growth has found the Solana ecosystem partly unprepared. However, the community is reacting, finding new solutions to the new problems that are emerging.
It should be remembered that only a year ago these problems did not exist, and that the boom that led to these numbers was quite sudden.
The price of SOL
The price of Solana’s native cryptocurrency, SOL, has partly followed a similar trend.
After recording a bottom of the bear-market below $10, in December 2022, in September 2023 it was still below $20.
It is worth noting that before the collapse of FTX in November 2022, the price of SOL was around $30, so in about a year it had not yet managed to recover those levels.
The turning point came in October 2023, when the price first returned to $30, and then continued its run.
In a few months, it made a leap that took it above $120 even before the end of the year. Furthermore, after a brief correction, it started growing again at the end of February 2024, reaching $210 in March.
From $20 at the beginning of October to $200 at the beginning of March, it has increased its market value tenfold (+900%) in just over five months.
At that point, however, a long phase of lateralization began, still ongoing, which sees it oscillate between $130 and $180 with rare and brief exceptions above and below these thresholds.
In fact, even the daily trading volumes on DEX on Solana have not risen since March, but have started to oscillate between 1 and 3 billion dollars.
The growth of Solana in the crypto market on DEX
The growth has been impressive.
Until September of last year, the overall daily trading volumes on DEX on Solana were practically always below 50 million dollars, while by October peaks exceeding 150 had already been recorded.
The following month they had already reached over 300 million, then in December they soared above a billion dollars with a peak even above two.
Excluding the peak, the growth was twenty times in three months, and it continued also in 2024, up until March. Since then, daily volumes often exceeded two billion dollars, with peaks reaching almost 4.
Once this growth ended, the price of SOL also stopped growing.
