Solana has surpassed Ethereum in monthly decentralized exchange (DEX) trading volume for the first time in crypto history. In July, Solana’s DEX volume hit $55.8 billion, outpacing Ethereum’s $53.8 billion, according to DefiLlama. This achievement marks a significant milestone in the evolving landscape of decentralized finance (DeFi).

What’s Driving Solana’s Volume?

Solana’s rise in DEX volume is attributed to various factors. The popularity of memecoins on Solana’s blockchain has played a crucial role. Tokens like Dogwifhat and Bonk have attracted speculative investors, some of whom became millionaires overnight. These tokens achieved billion-dollar market caps as of August 1.

Additionally, celebrities have entered the Solana ecosystem, launching new tokens using tools like Pump.fun and Moonshot. While many of these coins did not succeed, the involvement of public figures added significant momentum to the memecoin trend.

Moreover, wealth managers like VanEck have applied to list spot Solana ETF shares with the U.S. Securities and Exchange Commission. However, BlackRock’s head of digital assets, Robert Mitchnick, noted that listing a basket of crypto ETFs beyond Bitcoin and Ethereum seems unlikely at this time.

Ethereum’s DeFi Role and Institutional Promise

Despite Solana’s recent success, Ethereum remains the primary application layer for building decentralized applications (dapps). Major dapps like Aave and Uniswap originated on Ethereum. The blockchain gained renewed interest following a technological upgrade that significantly reduced transaction fees, making trading and swapping more affordable.

This upgrade, known as Dencun, was quickly followed by institutional demand for ETH on Wall Street. Issuers such as BlackRock, Bitwise, Fidelity, and Grayscale received authorization from the SEC to list spot ETH exchange-traded fund shares.

Spot Ethereum ETFs have traded for about six days, with Grayscale outflows affecting the new offering. According to Nansen, $750 million exited these products in the first four out of five trading days.

Debates abound about the impact of ETFs on Ether’s future price. Some believe that supply dormancy caused by ETF buying will increase on-chain staking yields, while others are skeptical about the development.

Regardless of these debates, on-chain data confirms Ethereum’s leading position in the DeFi market. Glassnode reported a 127% increase in daily active addresses on Ethereum and its Layer-2 solutions since the beginning of the year.

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