Solana's Market Position Strengthens Against Ethereum
According to CoinDesk, Solana's market position relative to Ethereum has shown significant improvement since January 2023. Initially, Solana was trading at a 97% discount compared to Ethereum's market cap, but this gap has now narrowed to a 70% discount. This shift raises questions about whether the market is still experiencing dislocation, especially as Solana begins to challenge Ethereum in on-chain activity and key network usage metrics.
In terms of network fees, Solana has made notable progress. In the second quarter, Solana generated $151 million in fees, which was 27% of Ethereum and its top Layer 2 solutions combined. Over the past 90 days, this ratio has increased to 49%. This growth indicates a rising demand for Solana's network capabilities. Similarly, Solana's decentralized exchange (DEX) trading volume has surged. In Q2, Solana recorded $108 billion in DEX trading volume, equating to 36% of Ethereum and its top Layer 2 solutions. In the last 90 days, this figure has risen to $153 billion, representing 57% of Ethereum's volume.
Stablecoin volumes on Solana have experienced fluctuations. In Q2, Solana's stablecoin volume was $4.7 trillion, 1.9 times that of Ethereum and its top Layer 2 solutions. However, in the past 90 days, this volume dropped to $963 billion, or 30% of Ethereum's volume. This decline is attributed to algorithmic trading that inflated previous numbers. Additionally, only 6% of Solana's stablecoin volumes are peer-to-peer transfers, compared to 30% on Ethereum, suggesting Ethereum's broader use for non-speculative activities. Solana's stablecoin supply has increased slightly, now holding 4.1% of Ethereum's on-chain value, up from 3.5% at the end of Q2.
Solana's total value locked (TVL) has also seen growth. At the end of Q2, Solana's TVL was $4.2 billion, representing 6.3% of Ethereum and its top Layer 2 solutions. Currently, Solana's TVL stands at $8.2 billion, or 12% of Ethereum's TVL. This data suggests a fair re-pricing of Solana's valuation relative to Ethereum. However, investors should consider qualitative differences between the two networks and potential catalysts as the year progresses and into 2025.