Solana DEX Traders Shrink as Meme Coin Scams Increase

Solana-based decentralized exchanges are seeing retail traders shift away, with August marking a continued year-long decline due to ongoing concerns about meme coin-related scams.

The daily DEX trader figure has dropped significantly from 4.8 million at the year’s onset to just 900,000 in August, as per a Dune Analytics dashboard. Likewise, daily DEX transactions have nearly halved, dropping from a peak of 45 million in July to 28.8 million.

An expert interviewed by Decrypt attributes this decline to exploitative meme coin schemes and Ethereum’s growing influence.

“The decline of opportunistic meme coins, which fueled speculative retail trading, significantly contributes to the steep drop in daily DEX traders,” said Ryan Lee, chief analyst at Bitget.

Lee added that Solana’s dependence on “unstable meme coin trading may obstruct sustainable growth.”

Decrypt has reached out to various Solana-based DEXs, but a representative from the Solana Foundation has not yet responded.

In August, hackers compromised the Instagram accounts of celebrities like Adele, Future, Tyla, and the Michael Jackson estate to promote a fake Solana token called FREEBANDZ, which subsequently lost 98% of its value.

Similarly, a fraudulent CR7 token, falsely claiming a link to Cristiano Ronaldo, surged to a $143 million market cap within minutes before insiders drained its liquidity.

Recently, a fake crypto resembling Kanye West’s official YZY meme coin emerged, with West clarifying that his Instagram account had been hacked, leading to an 81% value drop for his official token.

The meme coin wave on Solana that began late last year has devolved into abrupt pump-and-dump schemes aimed at profiting from unsuspecting investors.

As retail engagement declines and whale influence expands, Solana’s “retail chain” identity is fading, “potentially impeding long-term growth unless it diversifies beyond meme coins to compete with Ethereum’s extensive DeFi ecosystem,” Lee stated.

Despite a significant drop in Solana’s DEX volume share from 76% in January to only 8% by June, it has since bounced back to approximately 27%, according to Max Shannon, senior associate at Bitwise Europe, who spoke with Decrypt.

“The network maintains the best capital efficiency at scale, backed by a well-structured roadmap and a clear vision to enhance throughput while reducing costs.”

These underlying strengths set Solana up to “stay increasingly competitive” against its main competitors in the long term, he continued. “All in all, I am confident in Solana’s long-term viability and success.

Currently, Solana is up 1.8% for the day at $215 and more than 15% for the week.