Solana’s Potential to Reach $330 Aiming for 50% of Ethereum’s Market Cap

Solana employs a monolithic architecture that enables the network to leverage the speed and efficiency that modular blockchains often lack.

Source: teknolojikampusu.com

A report from VanEck on September 25 suggests that Solana could reach $330 in the future and capture 50% of Ethereum's current market capitalization, driven by its superior speed and transaction processing capabilities. This report highlights Solana's impressive throughput, which is capable of processing thousands of transactions per second (TPS) and is 3,000% higher than Ethereum’s TPS. Additionally, Solana boasts a daily active user count that is 1,300% greater than Ethereum’s, and transaction fees are nearly 5 million percent lower on the Solana network.

These advantages in speed and cost efficiency position Solana favorably against Ethereum for payments and remittances. The authors noted that stablecoins could significantly drive decentralized finance activity on Solana, allowing users to benefit from lower costs. Retail investors are reportedly beginning to recognize Solana’s potential to compete with Ethereum as a smart contract platform, while the lack of institutional interest remains puzzling. The report speculates that this hesitancy may stem from a reluctance to move away from established assets like ETH in favor of the relatively younger Solana.

An Analysis of Ethereum’s Lackluster Price Performance

In early September 2024, VanEck published a report examining the factors contributing to Ethereum's stagnant price. According to their analysis, the primary driver of Ethereum's poor performance is the value extraction occurring within Ethereum layer 2 networks. The surge in Ethereum layer 2 scaling solutions was spurred by the Dencun upgrade in March 2024, which significantly lowered transaction fees for these networks. As a result, revenues for Ethereum's layer 1 collapsed by 99% since March. However, network fees began to recover in the latter part of September 2024.

VanEck also highlighted a shift in users toward faster layer 1 networks like Solana and Sui (SUI) as another key factor impacting Ethereum's price and transaction revenue. While Ethereum still benefits from a first-mover advantage, the report suggests that this edge is diminishing rapidly.

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