Solana's DeFi Sector Is Going Dark, in the Literal Sense

Solana's DeFi sector is going dark, in its literal sense. Private DEXs are now handling the majority of Jupiter-routed trades, and this is a major shift in the activity on Solana.

Solana’s decentralized finance (DeFi) sector is going dark, in its literal sense. Private DEXs are now handling the majority of Jupiter-routed trades, and this is a major shift in the activity on Solana.

SOL briefly touched $185 on Tuesday, which is its highest in nearly three months, before slipping to $180 by Wednesday.

Behind this surge is a wave of trading activity happening through non-public smart contract vaults. SolFi, Obric v2, and ZeroFi are three of the main private DEXs operating on Solana.

These private DEXs don't offer user interfaces or public order books. Instead, they rely on internal vaults and use Chainlink's (LINK) Price Feed for optimal price accuracy. In essence, they excel at cutting-edge execution.

SolFi is known for quickly adding newly launched meme coins to its books, while Obric v2 and ZeroFi typically concentrate on pairs with high liquidity, like SOL/USDC and SOL/USDT.

The trade volume on these private DEXs is significant. According to Pine Analytics, they now process anywhere from 40% to 60% of the total volume routed through Jupiter.

This shift has no small impact on the SOL price. The meme coin trading activity, largely channeled through the private DEXs, has contributed to the recent rally in SOL.

However, the rapid rise of private DEXs also brings new challenges. The lack of transparency as these institutions gain prominence could deter broader participation or even attract regulatory scrutiny.

Moreover, the liquidity could become divided among these private DEXs and the public ones, potentially leading to a reduction in the overall liquidity on the public order books.

Solana is planning several upgrades to improve composability and pricing on public DEXs. These changes may diminish the role of private DEXs as they improve the execution quality on open platforms.

The Solana price is currently targeting $300 in the next month. Just last week, the SOL coin outperformed all other networks with a weekly revenue from dApps of $50 million.

Earlier this week, meme coin strength and macro factors also pushed Bonk (BONK) toward a 60% rally. That surge, like SolFi's rapidly rising volume, highlights how Solana's private DEX trend continues to shape short-term price movements.