Recently, many people are asking which public chain is better, SOL or Ethereum! Some people also say that Solana will replace Ethereum as the main L1. Which one do you prefer? Including Ethereum's ETF has been approved, will the next one be SOL's ETF! ! ! It is undeniable that SOL has been very popular recently. Let me explain to you the latest situation of SOL!
The situation of SOL has been mentioned before. It is a huge bubble. Why do we say this? Let's look at the data:
FTX Estate still has 41 million SOL ($7.6 billion) locked. 7.5 million ($1.4 billion) will unlock in March 2025, and an additional 609,000 SOL ($113 million) will unlock each month until 2028. Most tokens appear to be available for purchase at around $64 each.
Later on, it was all selling pressure. When the market is good, the panic will be better. When the market is bad, SOL will fall and become the next FIL! ! It is not an exaggeration at all. You can see how much panic the Grayscale ETF of billions of dollars has caused to Ethereum! Then look at SOL and you should understand!
As of now, Grayscale ETF still has ETH worth 6.27 billion that has not been converted, and more than 2 billion US dollars have been converted! ! Put this amount on SOL and imagine it!
At this time, many trolls may say, look at how many local dogs or hundred-fold coins there are on the SOL chain, and how powerful they are. Let me show you the data!
Currently, Ethereum’s share of EVM DEX trading volume in the past seven days is still 45.7%!
We can also look at the trading volume of SOL
ETH has a solid TVL of $80 billion, while SOL is only $3.2 billion.
I think stablecoin (and more broadly) TVL is a much harder metric to manipulate than volume/fees on low-fee platforms, and it simply shows how much real money is in the game.
SOL now has a lot of trading robots and runaway dogs on the chain, and the SOL indicator is seriously exaggerated. In the past 24 hours, there have been more than 50 runaway projects with trading volume exceeding $2.5 million on Raydium Standard LP, generating a total of more than $200 million in trading volume and more than $500,000 in fees. Orca and Meteora seem to have much less runaways, and I have a hard time finding any runaway projects with any meaningful trading volume on Uniswap (ETH).
Clearly, there are serious issues with Solana’s runaway projects, with multiple implications:
Given the unusually high transaction-to-user ratio and the amount of fake/fraudulent transactions on-chain, it seems likely that the vast majority of transactions are non-human. The highest daily transaction-to-user ratio on the main ETH L2 is 15.0x, on Blast (where fees are similarly low and users are farming Blast S2). For a rough comparison, if we assume the real SOL transaction-to-user ratio is similar to Blast, that would mean that over 93% of transactions (and fees) on Solana are non-human.
The only reason these scams exist is because it is profitable to do so. As a result, users lose an amount at least equal to the fees incurred + transaction costs, which can run into millions of dollars per day.
Once deploying these scams becomes unprofitable (i.e. when actual users get tired of losing money), you’d expect most trading volume and fee revenue to decline.
The number of users, GAS fees, and DEX volume on the SOL chain are all greatly exaggerated.
MEV on Solana is in a unique position. Unlike Ethereum, it does not have a built-in mempool; instead, projects like Jito created (now deprecated) extra-protocol infrastructure to emulate mempool functionality, allowing for MEV opportunities such as front-running, mezzanine attacks, etc.
The problem with Solana is that the vast majority of tokens traded are extremely volatile, low-liquidity memecoins, and traders often set trade slippage to >10% to ensure successful execution. This provides MEV with a lucrative attack surface to extract value:
While this is “real” value in the strictest sense, MEV will only be implemented as long as it is profitable, i.e. as long as retail investors continue to come in and play (and net lose) MEME. Once MEME starts to cool, MEV fee income will also collapse.
I see a lot of SOL papers discussing how infrastructure will eventually rotate out, like JUP, JTO, etc. This is very likely, but it is worth noting that they are lower volatility, higher liquidity, and simply do not offer the same MEV opportunities.
Experienced players are incentivized to build the best infrastructure to take advantage of this situation. During my research, some sources mentioned rumors of these players investing in controlling mempool space and then selling access to third parties. However, I was unable to confirm this information.
However, there are some clearly perverse incentives here - by directing as much memecoin activity as possible to SOL, it allows savvy individuals to continue to profit from insider trading in MEV, memecoin, and rising SOL prices.
When the SOL market is good, there is no big problem. When the market is bad, or when FTX's SOL is unlocked, there will be a lot of selling pressure. For the long term, Xin Ge does not recommend holding SOL. If you have to choose between SOL and ETH, I choose Ethereum!
