Solana DEX Volume Spike Exposed as Circular Trades and Automated Bots

A recent analysis by Bitquery has highlighted a significant issue in the Solana decentralized exchange (DEX) market, where a substantial portion of reported trading volume is comprised of circular trades and automated bot activity.

The study, which examined data from August 24 to September 22, found that $201.4 billion in trades were classified as either circular or botlike, with the majority ($111.6 billion) involving buying and selling the same token through the same pool within a single transaction.

A notable example of this phenomenon occurred on September 14, when two wallets engaged in a simultaneous buy-sell transaction worth $2,000, while another example showed that two groups of 20 and 50 wallets with similar trading records accounted for $26.3 billion of the flagged amount.

The analysis suggests that these circular trades and automated bot activity may be masking actual demand from independent traders, making it challenging to determine the true liquidity available in Solana's DEX market.