According to PANews, a recent report by Standard Chartered suggests that the Layer 1 blockchain Solana may be evolving into a platform primarily focused on generating and trading meme coins. The report, dated May 27, highlights Solana's dominance in the high-volume, low-cost public blockchain sector, attributed to its fast and low-cost transaction confirmation architecture. However, this technical advantage has led to an unexpected consequence: a significant portion of Solana's activity, measured by application revenue or 'GDP,' is concentrated on meme coin trading.
Standard Chartered notes that the meme coin craze has served as a stress test for Solana's scalability, but the volatility and speculative nature of these assets pose challenges. With a decline in meme coin trading volume, the bank warns that Solana may struggle to maintain its growth momentum.
The report indicates that the meme coin frenzy on Solana has peaked, and the combination of declining usage and 'cheap' transactions is not ideal. The bank suggests that Solana should expand into other areas requiring high-volume, low-cost transaction processing, such as financial settlements, decentralized cloud computing, or real-time data exchange. These emerging fields align well with Solana's high throughput characteristics.
Standard Chartered's report also mentions that these areas could include high-throughput financial applications and traditional consumer applications like social media. However, the bank cautions that scaling such applications could take years, potentially impacting Solana's market competitiveness, developer ecosystem, and platform reputation if progress falls short of expectations. This could lead to significant valuation pressure.
The report predicts that Solana's performance will lag behind Ethereum over the next two to three years before catching up, at least in terms of intrinsic value.
Solana has long positioned itself as a fast, low-cost Layer 1 public blockchain supporting smart contracts, directly competing with Ethereum. However, this advantage may be diminishing. Since Ethereum's Dencun network upgrade in March 2024, Layer 2 platforms have surpassed Solana in average transaction costs. This shift challenges Solana's value proposition as the 'cheapest high-throughput blockchain.' Standard Chartered points out that Ethereum's modular design, which layers data availability, execution, and consensus, allows for more efficient scaling while maintaining decentralization: 'The modular approach enables Ethereum to scale transaction processing at low cost (post-Dencun upgrade) while preserving the security advantages of a highly decentralized mainnet.'
