A September 25 report from VanEck predicts that Solana could hit $330 and skyrocket to 50% of Ethereum's current market cap, largely thanks to its superior speed and impressive transaction processing metrics.
The report cited Solana’s throughput, which can handle thousands of transactions per second (TPS), as being 3,000% higher than Ethereum’s TPS. Solana’s daily active users are 1,300% higher than Ethereum’s, and its transaction fees are nearly 5 million percent cheaper.
The report’s authors argue that Solana’s speed and cost-efficiency advantages give it a significant advantage over Ethereum when it comes to payments and remittances. In particular, stablecoin projects, which are seen as a major driver of decentralized finance (DeFi), can leverage Solana’s superior processing metrics to help save costs for users.
Retail investors have “gradually recognized” the potential of smart contract platform Solana to challenge Ethereum, but the report says institutional investors have yet to recognize Solana’s advantages.
The report hypothesizes that the reason for the delay in adoption by institutions could be because they are hesitant to move from blue-chip assets like ETH to adopt the much younger Solana network.
VanEck Analyzes Ethereum's Dismal Price Performance
In early September 2024, VanEck released a report outlining the factors holding back Ethereum prices. According to the analysis, Ethereum's poor price performance is mainly due to the extraction of value from Ethereum layer-2 networks.
The explosion of Ethereum layer-2 scaling solutions comes after changes in the Dencun upgrade in March 2024, which significantly reduced transaction fees for Ethereum layer-2 networks.
The strong growth of layer-2 projects and the sharp decline in transaction fees created a situation where Ethereum's layer-1 revenue dropped by 99% since March 2024. However, Ethereum network fees recovered by the end of September 2024.
VanEck specifically cited the migration of users to faster layer-1 networks like Solana and Sui (SUI) as one of the main factors holding back Ethereum’s price and transaction revenue. Ethereum still has a first-mover advantage, but that advantage is rapidly shrinking, according to the report.
