As a researcher with over two decades of experience in the financial markets, I have seen countless shifts and trends come and go. However, the recent movement of value from Solana to Ethereum, and vice versa, is particularly intriguing.
Approximately 42% of the value that had previously moved from Ethereum to Solana has unexpectedly returned to Ethereum. While Solana has attracted inflows from various blockchains over the past year, a greater proportion of these flows have been directed towards Ethereum. According to Michael Nadeau, founder of The DeFi Report, Solana received $2.36 billion in inflows from Ethereum in its Year-to-date (YTD) statistics.
However, more than $1 billion flowed back to Ethereum, representing 42% of the total.
Solana Loses Mln in TVL to Base, Optimism and Arbitrum
He too emphasized the importance of Solana drawing Total Value Locked (TVL) away from Ethereum and Layer-2 networks. In other words, he highlighted that TVL shifting from Ethereum (and the L2s) is crucial for Solana, because that’s where most of the value currently resides. However, he noted in a recent post that this transition isn’t progressing significantly at present.
No. Adding some context (and data) changes the story regarding flows to Solana from other chains👇
During the past month, @base has led the pack with a net inflow of approximately $463 million. @solana follows closely behind at around $197 million in net inflows. The third position goes to @SuiNetwork, which saw a net inflow of about $120 million.
If we zoom out to Year-to-Date, @arbitrum…
— Michael Nadeau | The DeFi Report (@JustDeauIt) October 30, 2024
In simpler terms, the founder of DeFi Report referenced information from crypto data provider Artemi. Nadeau noted that this year, Solana has seen a decrease in Total Value Locked (TVL) worth around $55 million, which went to Base, Optimism, and Arbitrum. Furthermore, the transfer of value from Ethereum to Solana this year has been relatively small, making up just 2.7% of Solana’s TVL. At present, the TVL for Ethereum is estimated to be around $50 billion according to DeFiLlama data.
This year so far, Ethereum has experienced approximately $6 billion in total outflows, yet about 83% of this amount moved to layer 2 (L2) chains within the Ethereum ecosystem. Nadeau believes that these assets will persistently contribute value to Layer 1 because most of the value hasn’t truly left the chain; instead, it’s being utilized within its ecosystem. His prediction is based on the observation that a significant portion of the value remains within the Ethereum network.
On October 28, Solana surpassed Ethereum in daily transaction fees, earning approximately $2.54 million within a day. This figure was significantly higher than Ethereum’s $2.07 million during the same period. Consequently, Solana rose to fifth place among fee-generating protocols. A large part of this increase in Solana’s daily fees can be attributed to heightened activity on the decentralized exchange Raydium.
On that specific day, Raydium accounted for roughly $3.41 million in fees on the Solana blockchain. Over the last month, Pump.Fun, a memecoin launchpad, has contributed approximately $29.5 million to Solana’s total fees of $61.7 million.
How Feasible Is a Solana ETF?
In July, VanEck and 21Shares applied for approval to launch a Solana Exchange-Traded Fund (ETF) with the U.S. Securities and Exchange Commission (SEC). The Chicago Board Options Exchange (CBOE) has recommended that the SEC approve these Solana ETFs in their respective applications. Rob Marrocco, head of ETP listings at Cboe Global Markets, referred to SOL as the third most popularly traded cryptocurrency, following Bitcoin and Ether.
Following this, the listings on CBOE’s website were taken down, fueling speculation about rejections or the companies re-evaluating their proposals. Moreover, Nate Geraci, President of The ETF Store, voiced his opinion on social media that this action supports SEC Chair Gary Gensler’s reluctance to endorse a Solana ETF during his term in office.
Lately, Canary Capital has applied for a Solana Exchange Traded Fund (ETF) with the United States Securities and Exchange Commission (SEC). This fund is designed to mirror the price of Solana (SOL) using the Chicago Mercantile Exchange’s CF Solana index, which serves as a real-time pricing benchmark, as stated in their S-1 registration document.
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2024-10-31 17:42