# Solana DEX Sector Deep Dive _+ updated views on the market_ February 7, 2025 • Michael Nadeau --- # Solana DEX Sector Deep Dive ## + updated views on the market Michael Nadeau February 07, 2025 Hello readers, I hope everyone weathered the volatility in alts over the last few weeks ok. In the report that went out on [January 15](https://thedefireport.io/research/bear-case-2025?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=solana-dex-sector-deep-dive), we noted that we had been rebalancing back to cash given the following: - Lots of “toppy” like vibes in the market - The election + the positive impacts on crypto have been priced in (short term anyway) - Uncertainty over Trump’s first 100 days Given the capitulation event that occurred last Saturday/Sunday, we wanted to share a brief update on our macro market views this week. We’ll follow that with a data-driven deep dive into the Solana DEX sector — which did roughly 25% of Nasdaq volumes from 1/18 - 1/20/25. Topics covered: - [Updated Market Views](#updated-market-views) - [Solana DEX Sector Deep Dive](#solana-dex-sector) - [Final Thoughts](#final-thoughts) ***Disclaimer:**** Views expressed are the author’s personal views and should not be relied upon as investment, legal, tax, business, or any other advice. * [](https://consensus-hongkong2025.coindesk.com/register/?promo=DEFIREPORT&utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=solana-dex-sector-deep-dive) Today’s issue of The DeFi Report is presented by Consensus Hong Kong. Crypto’s most influential event and what Forbes calls “The Super Bowl of Blockchain, and the World Cup of Web3.” Explore the FutureFi Summit at Consensus Hong Kong — dedicated to onchain innovation like liquid staking, DePIN, and real-world asset tokenization. [Register now](https://consensus-hongkong2025.coindesk.com/register/?promo=DEFIREPORT&utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=solana-dex-sector-deep-dive)and save 15% with code DEFIREPORT. Let’s go. # Updated Market Views A brief update this week as we’ll have more complete thoughts in the coming weeks (+ onchain data updates). We believe: - The recent sell-off had more to do with the market being ready for a correction than concerns over Tariffs. - Tariffs are creating uncertainty in the market. But ultimately, they are being used as a negotiation tactic. - Global Liquidity is contracting but could increase later this year. The timing of this depends on the next two bullet points. Data: CrossBorder Capital - Trump wants lower rates. And he needs to devalue the dollar. Why? A weaker dollar makes US goods more attractive (should narrow the trade deficit) — which allows him to push the America First agenda. The new Treasury Secretary, Scott Bessent, is aligned with him on this. - China wants to stimulate but cannot do so until the dollar goes down (if they stimulate into a strong dollar, their currency will suffer). We know that Trump spoke with China’s Xi Jinping on 1/17. We believe a deal will ultimately be struck, allowing for the devaluation of the dollar — which will allow China to stimulate and boost global liquidity. How do we get there? That’s unclear as the negotiation could include additional factors such as chips, Taiwan, etc. - There will be 3-4 rate cuts this year. The market is pricing in 2 — with 41% of CME traders anticipating either a single cut or no cuts. - Bullish catalysts for crypto pertaining to regulation — such as the reversal of SAB 121 (allows banks to custody crypto), a stablecoin bill, strategic bitcoin reserve, and more broad regulation of the industry (FIT21) are likely many months out. - Bitcoin has held up well, but it would be rare to see its price rise nearly 100% over a short period, consolidate, and move higher without a significant correction. We expect another sweep to the range lows ($90k) at some point, and possibly a break lower. In summary, the outlook for ‘25 is not as clear as it was in ‘24. It was easy for us to have [strong conviction back in August of last year](https://x.com/JustDeauIt/status/1821191664154644804?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=solana-dex-sector-deep-dive). Back then, there were many bullish catalysts ahead of us. Most of that has played out now — with the exception that global liquidity *should *go up later this year. As noted, we’ll have more detailed views in the weeks to come + coverage of some assets we are looking to add to during corrections. For now, on to part 2. *The crypto casino has moved to Solana*. Naturally, it’s time for a data-driven deep dive… # Solana DEX Sector “It’s the crypto casino, stupid.” Everyone (including us) has been trying to figure out what went wrong for ETH this cycle. But you can boil it down to this simple fact: the crypto casino is now playing out on Solana. It was Ethereum last cycle. But they lost the lead due to poor UX — which is directly tied to the lack of scalability on the L1 (high costs) and complexity for users on L2s (wallets & bridging). Solana is cheaper and easier to use. It’s that simple. Now. Let’s go onchain and see what we can learn about the new & improved crypto casino playing out on Solana. ## DEX Volumes ##### By Chain: Data: The DeFi Report, Dune ##### Takeaways: - 30-day total DEX volume across all chains = $744b ($24.8b/day). - Solana had a 60% market share over the last 30 days. It averaged $14.8b of volume/day. - Ethereum L1 has a 12% market share over the last 30 days. It averaged $2.9b of volume/day. - BNB has an 11.5% market share over the last 30 days. It averaged $2.8b of volume/day. - Base has a 7.3% market share over the last 30 days. It averaged $1.8b of volume/day. - Arbitrum has a 4% market share over the last 30 days. It averaged $.98b of volume/day. - The top 5 chains make up 95% of DEX volume. ##### By DEX: Data: The DeFi Report, Dune ##### Takeaways: - Solana did a total of $464m of volume across 6 protocols over the last 30 days. - Raydium is the market leader, averaging $6.2b of volume (44% market share). For reference, Uniswap averaged $3.3b of volume per day over the same period. - Orca is #2 with $4.6b of volume per day (32% market share). - Meteora averaged $1.7b of volume/day (12.7% market share). - Lifinity averaged $933m of volume/day (6.3% market share). - Pump dot fun averaged $361m of volume/day (2.4% market share). - Phoenix averaged $142m of volume/day (1% market share). For reference, Coinbased averaged $2b of volume/day in Q3. We’ll have the Q4 figures when they release Q4 earnings next Friday. In terms of market value, Raydium is currently trading at a $2.9b valuation ($1.5b circulating). Orca trades at a $204 million dollar valuation ($100m circulating). Uniswap trades at a $9b valuation ($5.4b circulating). We believe both Raydium and Orca are mispriced relative to Uniswap. Furthermore, Orca appears to be mispriced relative to Raydium — given its 32% market share in terms of trading volume (yet is just 3.4% of Raydium’s current market cap). ##### By Source of Trade: DEX vs Aggregators Data: The DeFi Report, Dune ##### Takeaways: - Roughly 1/3 of the volume on Solana originates on Jupiter (an aggregator). - Raydium has about a 35% market share in terms of users transacting directly on their interface. - Orca has about 5% of the volume running through its interface. It appears that most of their flow comes from Jupiter — which could be playing into its discounted market value relative to Raydium. ## New Token Launches Data: The DeFi Report, Dune ##### Takeaways: - 1.78 million tokens have been launched over the last 30 days (60k/day!). 1.69 million of them were launched on Solana (95%). - Of the 1.69 million tokens launched on Solana, 1.65 million (97.6%) were launched on pump dot fun. - Base was #2 with 77.9k tokens launched over the last 30 days (4.3% of the total), averaging 2.6k token launches/day. - BNB had 9,909 token launches over the same period. - Ethereum had 4,796 (159/day). - Arbitrum had a total of 267 token launches. If you’re wondering why altcoins have been bleeding out over the last few months, this could be playing into it. Pump dot fun changed the game by allowing anyone to launch a token with a click of a mouse. This is now the primary launch pad on Solana — with Raydium, Orca, and Meteora serving as a filtering system for tokens that have achieved some degree of escape velocity/trading volume. New launchpads are now coming to the Ethereum ecosystem via Clanker, Deployyyer, Etherfun, etc. ## Trading Size Data: The DeFi Report, Dune ##### Takeaways: - Solana DEXs average about 3.5 million unique trading wallets per day. - 70% trade less than $100. - 18.3% trade $100-$1k. - 8.7% trade $1k-$10k. - 2% trade $10k-$100k. - .2% trade $100k-$1m. - .02% trade $1m+. ## Organic Trading vs Bots Data: The DeFi Report, Dune Solana is averaging about 3.5 million traders/unique wallets per day over the last 30 days. 98% of these wallets appear to be managed by people. However… Data: The DeFi Report, Dune Is this a bad thing? Lots of people seem to have this view that volume from bots/algorithms/AI is not “real.” I never understood this because bots are economic actors onchain, just like people. If you’re a validator on Solana, do you care that your transaction fee came from a human transaction or a bot? Of course not. And given that AI agents will continue to proliferate and become more sophisticated, we expect to see bot volume increase from here. After all, it’s estimated that 70% of trading activity on stock exchanges is algorithmic. # Final Thoughts ##### DEXs We believe all trading of financial assets (+ many alternative assets that are currently not traded in liquid markets) will eventually move onchain. This seems obvious at this point. What is not obvious is how the business models will work and which chain (s) will attract the most liquidity. Solana has captured the “crypto casino” at the moment. But the big prize is when Wall Street moves onchain. Will Blackrock tokenize assets on Solana? Ethereum? Their own L2? That’s the million-dollar question. But if you follow the incentives, you can see a path where most Wall Street firms will want to launch their own L2 — where they can control more of the tech stack (and value accrual). For this reason, we think Solana will need to develop a similar incentive to attract large institutions. Of course, this will take years, if not a decade to play out. But the process should officially commence with new crypto regulations — which we might just get this year. ##### Markets The Fed’s Reverse Repo Facility dropped 8% yesterday and has now been drained to levels not seen in 4 years. This liquidity has been pushed into financial markets since Q3-23, helping to buoy risk assets. But there is not much left — which means markets could be more susceptible to a “liquidity shock” in the near term. This is potentially bearish for risk assets. In the longer term, we expect rates and the dollar to come down, and for China to ease conditions — which should ultimately be supportive of risk assets. Data: Federal Reserve of New York via FRED Take a Report. And Stay Curious. ***Disclaimer****: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.*