Is the ‘memecoin economy’ shifting to Solana from Ethereum?

• Solana tops Ethereum in the 24-hour memecoin trading volume. 
• Solana sees a dip in transactions by 50% due to heightened demand. 

The cryptocurrency market is buzzing with speculation and activity, especially due to the surge in memecoin trading on the Solana [SOL] blockchain.

On the 21st of March, the memecoin trading volume of Solana was at par with Ethereum [ETH], suggesting a strong inclination toward Solana-based memecoins among investors and enthusiasts alike. 

In fact, according to data from DeFi Lama, Solana’s 24-hour trading volume even surpassed that of Ethereum.

In a recent podcast, Haseeb Qureshi, the host of Unchained, noted,

“It actually looks like in 24-hour volume Solana is actually higher than Ethereum, although Ethereum is higher on 7day, but Solana has basically flipped Ethereum for total volume.”

What are the repercussions? 

While there’s a crazy surge in demand for Solana-based memecoins, there’s a lot of degradation of user experience on the Solana network. Reports suggest that there have been multiple transaction failures due to overwhelming demand. 

Remarking on the same, Qureshi added,

“50% of transactions are dropping now on Solana. That’s how just crazy the activity on the chain is.” 

Despite worries about usability and transaction speeds, the craze for memecoins continues as users rush into pre-sale opportunities, hoping for big profits. However, doubts remain about how long this trend will last including the potential risks ahead. 

Seeing this heightened demand for memecoins, platforms like Ethereum’s Layer 2 solutions and Arbitrum are attempting to establish memecoin economies. However, they are still unable to match the fervor witnessed on the Solana blockchain. 

Echoing the sentiment, Tarun Chitra Co-Founder and CEO of Gauntlet, remarked, 

“Look at the volumes, you look at the usage it’s not even coming close to where Solana is” 

What’s driving the memecoin mania? 

Chitra further added that while Ethereum holds a large share of memecoin market capitalization, most trading takes place on centralized exchanges rather than on-chain. 

In contrast, Solana sees the bulk of memecoin trading and price discovery directly on its blockchain, marking a notable shift in market behavior.

At press time, Ethereum declined by 7.73% whereas Solana witnessed a 1.03% surge. This shift signifies a change in the landscape of memecoin trading, with Solana emerging as a dominant force in the space.