A Sept. 25 report from VanEck predicts that Solana (SOL) may reach $330 and balloon to 50% of Ethereum's (ETH) current market capitalization driven primarily by Solana's superior speed and transaction processing metrics.
The report cited Solana's throughput, which can process thousands of transactions per second (TPS) and is 3,000% higher than Ethereum's TPS. Solana's daily active user count is 1,300% higher than Ethereum's and transaction fees are nearly 5 million percent cheaper on the Solana network.
Solana's stark advantage in speed and cost efficiency gives it a significant leg-up on Ethereum for payments and remittances, the report's authors argued. Stablecoins, in particular, were noted as major drivers of decentralized finance activity that could leverage Solana's superior processing metrics to pass on cost savings to users.
Solana’s Transactions per second metrics. Source: Solana Compass.
Retail investors were "slowly waking up" to Solana's potential to challenge Ethereum as a smart contract platform, the authors said, and were puzzled that institutional investors have not yet caught on to Solana's advantages. The report theorized that a possible reason for the lag in institutional adoption might be hesitancy to switch from blue-chip assets like ETH and embrace the much younger Solana.
VanEck analyzes Ethereum's dismal price action
Earlier in September 2024, VanEck released a report outlining the factors suppressing Ethereum's price. According to the VanEck analysis, Ethereum's poor price performance is mainly driven by value extraction from Ethereum layer-2 networks.
The explosion in Ethereum layer-2 scaling solutions followed changes made by Ethereum's Dencun upgrade in March 2024, which massively reduced transaction fees for Ethereum layer-2 networks.
Ethereum network fees April 2024-September 2024. Source: Token Terminal.
The sharp growth in these second-layer projects and the massive reduction in transaction fees created a situation in which Ethereum layer-1 revenues collapsed by 99% since March 2024. However, Ethereum network fees managed to recover in the latter part of September 2024.
VanEck also specifically cited a user shift to faster layer-1 networks like Solana and Sui (SUI) as another major factor suppressing Ethereum's price and transaction revenue. Ethereum still enjoys a first-mover advantage, according to the VanEck report, but that advantage is quickly eroding.
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