Are Solana DeFi Apps Replacing Centralized Trading Platforms?

DeFi is becoming more accessible than ever before. Once considered cumbersome and complex when compared to its centralized counterparts, Solana DeFi is steadily siphoning market share away from centralized exchanges.

Driven by memecoin mania, Solana’s onchain spot trading volume and liquidations are rivaling centralized exchanges. Moreover, DeFi project tokens are outperforming native CEX coins on extended timeframes.

How does Solana DeFi compare with centralized exchanges?

Spot Trading Volume

Courtesy of its flourishing meme economy, Solana has reached new all-time highs in monthly DEX trading volume. In November alone, Solana’s onchain markets witnessed over $129B in monthly trading volume, surpassing the Ethereum Layer-1’s May 2021 record.

Solana’s surging DEX volume is soaring to new heights, now challenging centralized  exchanges for dominance. 

Based on DefiLlama data, Solana’s thriving DeFi scene regularly witnessed over $5B in daily trading volume towards the end of November. In doing so, the network often surpassed the volumes of several prominent exchanges.

For example, Solana handled over $5B in onchain spot trading volume on November 24. In comparison, top exchanges like Coinbase and OKX witnessed $6.1B and $5.9B during the same timeframe, based on historical CoinMarketcap data.

Despite memecoin markets cooling off this week, Solana DeFi trading volumes continue to rival popular exchanges. Recording $4.8B in daily DEX volume on December 3rd, Solana still demonstrates a considerable lead over exchanges like Kraken and Kucoin, which hover around the $3B mark.

Liquidations

Beyond spot trading, Solana’s onchain perpetual markets have also become a popular way for traders to express their opinion on the market.

In periods of volatility, Solana DeFi has proven its ability to handle a high volume of liquidations. Based on Ranger Finance data, the Solana blockchain has facilitated over $100M in onchain liquidations over the last 24 hours.

During this period, over $81M worth of SOL was liquidated onchain. Comparatively, Coinglass data reports that only $19.8M worth of SOL was liquidated on centralized exchanges. 

This suggests that either traders largely prefer trading SOL onchain, or DeFi users are more inclined to apply dangerous levels of leverage to their positions.

Token Performance

With Solana DeFi activity surging throughout the year, ecosystem tokens related to decentralized exchanges have garnered greater attention and mindshare. In crypto markets, this is often illustrated in asset prices.

According to Artemis data, centralized exchange coins have been one of the industry’s worst-performing sectors over the last month. Despite the wider crypto market enjoying a bullish Q4, centralized exchange coins have only witnessed a 39.4% increase in weighted average.

Meanwhile, DeFi and Perpetual DEX coins have fared better, rising 77.2% and 78.2% respectively. Solana-based DeFi coins have been some of the best performers over the last month, with tokens like $DRIFT rising over 180% throughout November based on Step Finance data.

While Solana DeFi apps are yet to surpass the levels of trading volume and liquidations that traders might see on platforms like Binance, the ecosystem is already eclipsing some of the industry’s most reputable exchanges.

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