Solana takes break from eating Ethereum’s lunch — for now

Ethereum is constantly pestered by smaller competitors for mindshare. Some reckon Solana could be the final boss

article-image

Solana co-founder Anatoly Yakovenko | Permisionless II by Blockworks

share

Finding the next big thing is the secret sauce for many investors, whether it’s startups, stocks, bonds, commodities or crypto.

Obsession with discovering “the next Ethereum” — or even an “Ethereum killer” — then seems only natural.

Ethereum’s smart contracts set the industry standard nearly a decade ago and have since inspired dozens, if not hundreds or even thousands, of rival networks. 

Solana is generally considered Ethereum’s primary competitor right now. Comparing market values shows nothing has really come close to eclipsing Ethereum. Yet.

In fact, BNB Chain (BNB) and Cardano (ADA) have come the closest over the past three years. 

  • The market cap of BNB in April 2021 and late 2022 was about 33% of ether’s (ETH).
  • ADA had up to 25% of ether’s cap during the last bull market.
  • Solana (SOL) set a new record relative to ether last month with 19%.

Read more: It’s a Solanaissance: These 5 charts will cure the Ethereum vibecession

Price ratios — dividing one assets’ price by another and comparing over time — are commonly used to gauge the relative strength of cryptocurrencies.

Analyzing price alone is problematic due to inflation and deflation rates of many top cryptocurrencies.

Solana’s market cap ratio against ether has retraced by a quarter since Christmas, now about 14%

Take ATOM, the native asset for multichain ecosystem Cosmos. Over the past year, ATOM’s circulating supply has swelled by a third and its token price has slipped by 20%, according to data from The Tie.

Meanwhile, ATOM’s market cap has grown 15%. Price alone implies ATOM is struggling, when it could be the market is simply absorbing fresh supply — and then some.

Solana, on the other hand, has almost 17% more circulating supply than this time last year. Its price has quadrupled across that period, while its market cap has nearly quintupled. Comparing only SOL’s price would leave a chunk of the asset’s growth unaccounted for.

Much of Solana’s outsized growth over the past year can be attributed to its gradual recovery since the FTX debacle.

Read more: Rebuilding trust: Solana’s roadmap after a challenging year

Disgraced FTX co-founder Sam Bankman-Fried was a significant investor in Solana and its ecosystem, leading SOL to collapse by up to 65% directly following FTX’s implosion in late 2022. Ether fell less than 30% and completely recovered in about two months.

Market caps are just one metric by which to compare cryptocurrencies and blockchains. Total value locked, unique addresses, on-chain volumes, developer activity, fee revenues and transaction counts are among others. Each has its flaws.

In any case, Ethereum isn’t exactly threatened right now. But going by market cap growth alone, Solana is well on track to become Ethereum’s primary competitor over BNB.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg

Research

The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.

article-image

Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral

article-image

Sponsored

Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM

article-image

The side events were the places to be at Consensus 2024, according to attendees

article-image

Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them

article-image

I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right

article-image

Also, the ETF hype train can count out at least one member