As a seasoned crypto investor with over a decade of experience under my belt, I have witnessed the rise and fall of numerous digital assets. My portfolio has seen its fair share of Ethereum (ETH) and Solana (SOL), two giants that have been making waves in the blockchain space.
According to Swiss crypto bank Sygnum, the Layer-1 blockchain Solana, currently trading at $140.6 with a 2.9% volatility over the past 24 hours and a market cap of $65.91 billion, could potentially present a “significant threat” to Ethereum as it is increasingly preferred by financial institutions for the deployment of real-world asset tokenization platforms and stablecoins.
It seems that some traditionally cautious organizations are favoring Solana over Ethereum lately, mainly because of Solana’s superior scalability, reliability, and security features as stated in a recent report by a Swiss cryptocurrency bank published on October 1.
“A PayPal executive recently claimed at a Solana event that ‘Ethereum is not the best solution for payments.’”
Moreover, Sygnum Bank highlighted that companies like Visa are adopting Solana for USD Coin due to its low costs and high transaction speed. On a different note, Franklin Templeton has announced plans to launch a mutual fund on the Solana blockchain. Interestingly, even banking titan Citibank is contemplating using the Solana network for quicker cross-border transactions.
But it’s going to be a long journey for Solana to overtake Ethereum as it is still one-fourth in size in comparison to the latter. The Sygnum Bank also pointed out that a few of Solana’s metrics look overstated. For example, a large part of the blockchain’s revenue depends only on the memecoin activity, which can be very much seasonal.
Edward Snowden, known as a whistleblower, has voiced concerns about Solana’s heavily centralized structure. In contrast, Ethereum blockchain has gained support from Larry Fink, the CEO of BlackRock, in its recent endeavors.
At present, Ethereum holds a dominant position in the tokenization of tangible assets and stablecoin industries, accounting for approximately 81% and 49%, respectively, based on on-chain statistics. On the other hand, Solana only accounts for less than 3% in both these areas.
Solana vs Ethereum
In its report, Sygnum Bank noted that the SOL/ETH price is up 300% year-to-date and it was up by 600% last year in 2024. However, it believes that after two long years of underperformance, ETH
ETH
$2 386
24h volatility:
2.1%
Market cap:
$287.21 B
Vol. 24h:
$17.46 B
could be seeing a sharp reversal.
Although Ethereum’s technical path might be intricate, Sygnum posits that Ether is a more attractive choice for traditional investors compared to Bitcoin, due to its relative ease of evaluation and assessment. They pointed out this aspect specifically.
As an analyst, I’d rephrase that statement as follows: “My analysis indicates that Ether’s value primarily stems from the economic activities occurring on its network and the subsequent revenues generated. In essence, it shares similarities with an equity investment, where factors like growth, profits, and cash flows are scrutinized. This comparison to traditional investments might make it more appealing for conventional investors, rather than just being viewed as a digital form of gold.
According to Sygnum, the likelihood of the U.S. securities regulator considering Ether a security has dropped substantially following the completion of their Ethereum investigation on June 19. Meanwhile, various experts in the crypto sector suspect that the U.S. regulatory body still sees Solana as a potential security.
In essence, if Solana wants to outperform Ethereum over time, it should lead the way in shaping upcoming technological eras and foster innovative, blockbuster decentralized apps that captivate the public’s interest and spark broad acceptance, as stated by the bank in their summary.
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2024-10-04 11:54