Solana and Ethereum have both achieved important milestones, while also fostering fierce competition.
However, a recent event may have increased tensions between the two sides.
In its monthly report, Swiss crypto bank Sygnum highlighted Solana [SOL] as the most important rival to Ethereum [ETH] in the financial sector, and a viable alternative for many implementations and development breakthroughs.
Often referred to as the “Ethereum killer,” Solana has steadily gained attention for exploiting Ethereum’s weaknesses to gain a competitive advantage.
However, there is still a large gap in market capitalization – around $218 billion – as Ethereum continues to outperform Solana. However, Solana’s price ratio to Ether has increased by 300% over the past year. What contributed to this increase?
Solana's Strong Presence in the Financial Industry
Two years ago, a similar confrontation between SOL and ETH erupted when Solana partnered with Visa. At the time, SOL was integrated for USD Coin payments, boasting high throughput and low fees.
The growth was further reinforced recently when asset management firm Franklin Templeton announced plans to launch a mutual fund on Solana.
Solana's growing capabilities in the financial industry have led the Swiss bank to recognize the blockchain as a long-term “rival” to Ethereum.
While there is no specific timeline for when this change might happen, Solana is clearly closing the gap with Ethereum on many metrics.
First, Ethereum DEX volume has dropped from $2 billion in August to $1.7 billion today. In contrast, Solana DEX volume has remained stable and even improved over the same period.
Source: Artemis Terminal
In short, partnerships with major financial institutions like Visa have increased Solana's visibility, potentially attracting new investors and challenging Ethereum's dominance.
Beyond these partnerships, the ongoing comparisons between Solana and Ethereum are backed by a carefully planned strategy that aims to surpass the Ethereum blockchain, which has been around for five years.
Solana Exploits Ethereum's Weakness
Solana's architecture supports high throughput and low transaction fees, making it attractive to both users and developers.
In contrast, Ethereum is facing challenges from high gas costs, which may make users hesitant to participate in its network.
Source: Dune
The impact of this disparity is evident in the chart above. Monthly transactions on Solana have surpassed 1 billion, while Ethereum is experiencing a decline in network activity with just 200 million transaction volume.
Apparently, high gas fees on Ethereum have pushed users to Solana to make transactions faster and at lower costs.
At its core, Solana has achieved remarkable resilience in just four years since its launch. However, while there are areas where SOL excels, Ethereum still holds the upper hand in other areas.
In short, for Solana to truly compete with Ethereum, it must develop innovative decentralized applications that drive mass adoption – an area where Ethereum currently dominates.
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