- Sygnum Bank highlights Solana’s strong performance.
- The chain is in a good position to challenge Ethereum.
- Ethereum underperforms in key metrics.
Known as the Ethereum killer, Solana has long positioned itself as the main challenger to the biggest DeFi network. However, it has continued to lag behind Ethereum in key metrics.
Recently, a Sygnum Bank report analyzed whether Solana has the potential to challenge Ethereum’s dominance. Thanks to its remarkable recovery after the FTX collapse, Solana is in a better position than ever.
Can Solana Challenge Ethereum?
Despite experiencing many setbacks in the recent years, Solana has shown remarkable resilience. On Tuesday, October 1, digital assets-focused Sygnum Bank released a report looking at Solana’s potential to challenge Ethereum. Its remarkable recovery after the FTX collapse indicates it has the potential to do so.
As the report notes, Solana has outperformed Ethereum by 300% year-on-year. This is due to several factors, linked to both Solana and Ethereum. On Solana’s side, the launch of the Firedancer update was a major driver of positivity. This update aimed to improve Solana’s efficiency and processing power, while also introducing key new features.
At the same time, Ethereum is facing its own challenges. While its layer 2 scaling solutions are seeing growth, the same is not true for the base chain. In fact, Ethereum saw its network traffic decline by 15%, contributing to ETH’s recent underperformance. Sygnum Bank noted that layer 2 networks, while key for keeping Ethereum scalable, also cannibalize its network traffic.
How Solana Bounced Back After the FTX Collapse
In late 2022, Solana faced multiple challenges, particularly due to its ties to FTX. The failed exchange was a major investor in Solana, alongside being one of the biggest validators for the network. After its collapse, Solana faced network-wide outages, with investors losing faith in the token.
Despite these setbacks, Solana has demonstrated its independent potential. Thanks to its numerous technical improvements, the network demonstrated its commitment to build. Solana created several successful campaigns to improve its image, including the “Only Possible on Solana” campaign. This slogan aimed to demonstrate Solana’s unique speed and scalability.
At the time, Solana also launched its mobile division, including its own Android phone with Web3 features. Despite slow initial sales, the phone ultimately sold out. This also coincided with the surge in memecoin traffic on Solana. This saw memecoins, such as Bonk, rise to prominence, with Bonk specifically becoming the largest memecoin on the network.
On the Flipside
- Despite its bullish take on Solana, Sygnum Bank does not expect high demand for Solana ETFs.
- While Solana has the potential to overtake Ethereum in transaction volumes, it still lags far behind in terms of Total Value Locked (TVL).
- Solana is facing continued criticism over its supposed centralization. Most recently, Edward Snowden blasted the network over the issue.
Why This Matters
Solana’s recent performance suggests it could challenge Ethereum’s dominance. If Solana continues to gain ground, it may attract even more institutional interest.
Read more about Solana’s recent challenges:
Solana’s Falling Revenues Risk Worsening Its Centralization Problem
Read more about Snowden’s criticism of Solana:
Is Snowden Right About Solana? How Centralized Is the Network?
