Solana DEX Volumes Surpass Ethereum’s Despite Drop in Meme Coin Trading
VanEck’s February crypto report indicates that Solana’s trading activity has displayed notable resilience amid a downturn in meme coin trading. The findings reveal that Solana’s transaction volumes briefly eclipsed those of the Ethereum ecosystem, encompassing both its Layer 1 (L1) and Layer 2 (L2) networks.
### Solana’s Robust Trading Metrics
The report highlights a remarkable 191% surge in Solana’s (SOL) price during 2024, alongside a staggering 700% growth in on-chain revenues. This significant increase can be attributed largely to Solana’s minimal transaction costs—averaging approximately $0.05, compared to Ethereum’s $1.27. This advantage enables the Solana blockchain to efficiently handle high trade volumes without imposing hefty fees on users.
Interestingly, meme coin trading has contributed profoundly to Solana’s revenue structure, accounting for close to 80% of its total revenue. For instance, Pump.fun, a meme coin creator on the Solana network, has amassed over $577 million in fees within a single year. However, this segment of the market has faced scrutiny due to allegations of insider trading and automated bots prioritizing token purchases over retail investors. The controversy surrounding the LIBRA coin, which was launched in February, exemplifies these challenges, revealing how rapid declines in value can leave investors with substantial losses.
In February, a sharp decline in meme coin trading led to an 80% drop in Solana’s stablecoin transfers compared to January. Additionally, various trading metrics experience declines: DEX volumes dropped by 55%, fees collected fell by 63%, and MEV (Miner Extractable Value) activity decreased by the same margin. Despite these challenges, Solana remains competitive with Ethereum’s entire ecosystem, buoyed by plans for future protocol upgrades aimed at enhancing network performance.
### Ethereum’s Challenges and Solutions
While Solana is experiencing growth, Ethereum has been grappling with a significant decline in both revenue and overall usage. Over the past year, gas prices on Ethereum have plunged 88%, leading to a 93% drop in overall revenue. Additionally, Ethereum’s share of total blockchain revenue has diminished from 55% in February 2024 to merely 24% in February 2025.
Analysts from VanEck, including Matthew Siegel and Patrick Bush, suggest that Ethereum’s strategic shift encouraging users towards L2 solutions has inadvertently reduced Mainnet activity. This reduction has prompted significant projects like Uniswap and Ondo to explore options beyond the Ethereum ecosystem.
In terms of capacity, Ethereum’s transaction throughput remains limited, reaching a maximum of only 63 transactions per second (TPS), which pales in comparison to Solana’s impressive capability of 4,000 TPS. In light of these concerns, validators raised gas limits by 20% in February, increasing transaction capacity from 30 million to 36 million gas units. Upcoming improvements, such as the Pectra upgrade, are expected to include enhancements to L2 blob capacity and validator stake limits, along with modifications to staking processes.
Moreover, the Ethereum Foundation has introduced a new update, dubbed Intents, which aims to bolster transaction efficiency across Layer 2 networks, potentially aiding in revitalizing user engagement on the platform.
With the competitive landscape heavily influenced by factors such as transaction costs, trading volumes, and user experience, the ongoing developments in both Solana and Ethereum will be critical in shaping the future dynamics of these prominent blockchain ecosystems.
