The surge in on-chain activities on Solana: A temporary speculative boom or the upcoming trend of L1 dominance?

The trading volume of Solana DEX has seen a rapid increase along with the surge in weekly active addresses, bringing unprecedented enthusiasm to on-chain activities, even drawing comparisons with the current Ethereum ecosystem. However, whether Solana's current momentum will be sustained or is just a temporary phenomenon driven by speculation remains to be seen and requires more time to clarify.

DEX Market Share Surges Compared to CEX, Solana Foundation: DeFi Development at an "Unprecedented" Pace

Solana On-Chain Activities Show Significant Growth

Over the past few months, Solana has seen a notable increase in on-chain transaction volume and daily active addresses, with the former reaching 43.38 million transactions.

The latter, on the other hand, surpassed the 2 million mark for the first time just a few days ago.

DEX Emerges as the Top Performing Product on Solana

From a trading volume perspective, it is evident that the primary revenue source for the Solana network comes from its decentralized exchange (DEX).

Raydium

Raydium, serving as a major revenue generator, set a historic high in July with a trading volume of $30 billion after a surge of users, ranking second only to Uniswap as the current second-largest DEX.

In July alone, the protocol generated over $65 million in trading fees, nearly doubling the $33 million from June.

Pump.Fun

Additionally, with the rise in meme coin popularity and demand, Pump.Fun, a meme coin launch platform, introduces tens of thousands of new tokens on the platform each week.

Reportedly, since its launch in March 2024, the platform has created over 1.5 million meme coins.

In July alone, Pump.Fun generated over $28 million in trading fees, marking the highest monthly revenue since the platform's inception.

Jito

Furthermore, Jito, the largest liquidity staking platform on Solana similar to Lido on Ethereum, and the largest third-party client on the network, also delivered impressive results.

Network validators using the Jito client collected approximately $36 million in maximum extractable value (MEV) fees in July, a 26% increase from the previous month.

This figure has been steadily increasing over the past six months, with a peak of $3.19 million in fees on July 28, the highest MEV fee on Solana to date.

Is Solana Catching Up to Ethereum?

Despite the impressive on-chain activity on Solana in recent times, with lower fees and faster transaction processing speed, it is gradually challenging Ethereum's dominant position in the layer 1 (L1) space.

However, behind Solana's outstanding data, there are still several factors worth considering:

• Token Quality and Sustainability: With a large number of new coins released daily on Solana, if most projects are driven by speculative motives or scams, it may only indicate that Solana's network is efficient in handling millions of transactions simultaneously, but it mostly adds market noise rather than real value.

• Risk of Wash Trading: Data is volatile, and many protocols offer incentives to encourage users to showcase impressive ecosystem performance, not to mention the potential for wash trading or other inflated trading volume behavior in some DEX.

• Indicators are not the Sole Basis for Evaluation: Different blockchain metrics can paint a picture of network health and adoption rates. While DEX trading volume is indeed a valuable metric, it may not necessarily reflect the entire Solana ecosystem's overall picture or long-term sustainability, which also requires developer activity, successful use cases, and real-world applications.

The DEX trading volume advantage on Solana is evident, but whether this trend will continue or is merely a short-term phenomenon driven by speculation requires more time to clarify.