Are Solana's stablecoin trades influenced by market makers?

The volume of stablecoin transactions on Solana has experienced remarkable growth, with inflows of about $303 billion in January alone, marking a stunning 2,520% increase from the mere $11.56 billion recorded in January 2023.

This explosive growth has increased the market share of Solana in the stablecoin-market nearly tripled, a significant jump from the 1.2% share it claimed just a year earlier.

Questions on USDC transfers on Solana

The remarkable increase in the trading volume of stablecoins on Solana, which began primarily in October 2023 and has increased 650% since then, has contributed significantly to the growing prominence of the blockchain network.

New information has a worrying trend exposed in the world of USD Coin (USDC) transactions, suggesting that the market is significantly influenced by a select group of players.

A post on Twitter revealed that in the past week a whopping 90% of the $120 billion USDC transactions were conducted by just nine accounts, all linked to Phoenix market makers.

The reliability of these figures are called into question by the concentration of USDC transfers among a select number of market makers. Questions arise about actual liquidity and activity within the Solana stablecoin market because of the practice of artificially inflating transaction volumes by creating and canceling unfilled orders.

Are Market Makers Influencing the Rise in Transactions?

Even amid the remarkable increase in the volume of stablecoin transactions on Solana, the revelation that a select group of market makers manage the vast majority of USDC transactions raises questions about the true dynamics of the market.

On Jan. 18, Paxos marked an important milestone by launching its USDP stablecoin. introduce on the Solana blockchain network, which coincided with a notable increase in decentralized finance (DeFi) activity on this network.

Solana's own digital currency, SOL, has experienced remarkable growth recently, boosted by recent developments. In the past seven days alone, the price of SOL has risen a whopping 27.78% and is currently trading at $103.16. Despite this increase, it still remains 16% below its December 2023 peak of $123 and significantly below the record level of $260 reached in November 2021. These developments indicate an ongoing phase of correction and reconsideration among investors within the Solana ecosystem.

Market corrections and investor reassessment

The recently observed fluctuations in SOL prices show an ongoing market adjustment and rethinking by investors within the Solana ecosystem. It is essential to explore in depth the factors driving these developments as the Solana stablecoin market continues to grow.