According to recent data from DefiLlama, Solana (SOL) has reportedly surpassed the combined 24-hour decentralized exchange (DEX) volume of both Ethereum and Binance Smart Chain (BSC), claiming a market dominance of 36%. This remarkable achievement is perhaps a sign of what’s to come with increasing token prices, with some even suggesting it would be “silly not to have SOL in your portfolio.” But is it organic?
What Are the Concerns Regarding Solana’s Reported DEX Volume?
Despite the excitement surrounding Solana’s reported figures, there are growing concerns and skepticism among some market watchers. Critics point to the numbers as being “incredibly suspicious” and indicative of potential wash trading or astroturfing practices.
What is Wash Trading?
Wash trading is a form of market manipulation where an investor buys and sells the same financial instruments to create artificially high trading volumes, misleading other investors about the asset’s true demand.
What is Astroturfing?
Astroturfing is the practice of disguising orchestrated campaigns as spontaneous, grassroots behavior to give credibility to a cause, product, or idea, often by hiding the true financial backers.
These suspicions are not entirely dismissed, given the blockchain’s association with high-profile industry figures known for aggressive market tactics. If we remember SBF correctly.
Is There Evidence of Wash Trading on Solana?
Critics argue that the high volume figures on Solana could be the result of wash trading. This involves creating a liquidity pool, injecting substantial capital, and then trading within that pool using different wallets to generate large volumes artificially. This practice can inflate the volume figures without reflecting genuine market activity.
Also, the majority of Solana’s 7-day volume occurred on two decentralized exchanges (DEXs): Raydium and Orca. Some observations from these platforms indicate unusually high volumes, with the volume to total value locked (TVL) ratios exceeding normal levels by 50-100 times. This is not how efficient markets like Uniswap show much lower volume/TVL ratios, suggesting that genuine organic usage would result in significantly lower figures.
Agree to Disagree To The Wash Trading Claim
Other users and stakeholders in the Solana ecosystem disagree with the wash trading accusations and point out that lower transaction fees and faster processing times on Solana naturally encourage higher trading volumes and Solana’s efficiencies as a blockchain could naturally lead to more frequent swaps and arbitrage opportunities compared to Ethereum.
Conclusion
Whatever the outcome is or will be of the fake claims, it is important to consider how the debate over Solana’s DEX volume is not just about numbers but also about trust and perception in the crypto community.
If we believe the on-chain analysis and use the macro context to form a view, we can see that the attention and usage from surpassing Ethereum by Solana in DEX volume is a notable development in the crypto markets, and could underscore the future performance of Solana in any way.
