Decentralized exchanges (DEXs) built on the Solana network overtook those built on longtime reigning decentralized finance (DeFi) king Ethereum in trading volume across the month of July—the first time that's happened to date.

According to DeFiLlama data for DEX volumes by blockchain, Solana outpaced Ethereum in terms of overall trading volume for the month, and won out on the daily front on 17 total days last month.

Solana-based protocols were responsible for 30% of all crypto DEX volume in July, whereas Ethereum followed with 28.12%. In pure numbers, Solana’s DeFi ecosystem saw its exchanges process $56.849 billion worth of transactions, while Ethereum exchanges finished the month at $53.867 billion. That’s a difference of over 5%.

Frank Mathis, CEO and co-founder of blockchain infrastructure provider GenesysGo, told Decrypt that he believes the trend stems from Solana positioning itself “as the blockchain of fun and for the people.” In recent months, Solana has become the leading destination for meme coin launches, thanks to lower costs than Ethereum.

“Solana has done an amazing job of building community and bridging the gap between the developer community and the community of users," he added.

What makes this development particularly notable is that Ethereum has long been the undisputed king of DeFi. The only other occasion when Ethereum DEXs were overtaken in volume was by BNB Chain, previously called Binance Smart Chain (BSC), back in 2021. That happened in the middle of BSC meme coin mania, presaging the Solana surge that has greatly contributed to the network's recent spike in trading.

“Of course, meme coins are this cycle’s meta,” Mathis said. “Whether that turns out to be a good thing or a bad thing in the long term for the broader ecosystem remains to be seen.”

“If this trend continues, then I think we will start to realize more and more that the Ethereum ecosystem is at an inflection point,” Mathis added. “Solana has done an amazing job of making the people in its community feel like they are a part of something bigger than themselves.”

Ethereum is the network that first introduced smart contracts, or chunks of code that can power autonomous, decentralized applications (dapps). That set the stage for the development of DeFi and DEX protocols. Consequently, Ethereum has a significant first-mover advantage over other blockchains.

Mathis noted that this will likely result in developers working to “make their product compatible with both platforms in order to capture as much market share and user attention as possible.”

Solana saw soaring popularity and price action in 2021, but lost steam and shed a substantial amount of its SOL token price in late 2022 amid the collapse of the closely linked crypto exchange FTX and its sister trading firm Alameda. But the network started to rebound last year and now is the leading destination for newly launched tokens of all sorts.

Broadly, centralized crypto exchanges are slowly losing ground to their DeFi counterparts, as detailed in a recent Decrypt report. Messari Senior Research Analyst Kunal Goel told Decrypt that multiple factors are fueling DEX market share growth, including “the growth of meme coins and long-tail assets.”

Edited by Ryan Ozawa