According to Cointelegraph, financial institutions that adopt real-world asset tokenization platforms and stablecoins on Solana could position the blockchain to challenge Ethereum over the long term, as per a Swiss crypto bank. Recent trends indicate that even conservative institutions may prefer Solana’s scalability over Ethereum’s stability and security advantages, Sygnum Bank stated in an Oct. 1 report. A PayPal executive recently mentioned at a Solana event that 'Ethereum is not the best solution for payments.' Visa has also integrated Solana for USD Coin (USDC) settlement, highlighting its 'high throughput' and 'low costs.' Additionally, trillion-dollar asset manager Franklin Templeton announced plans to launch a mutual fund on Solana, and Citi is considering Solana for cross-border payments.
However, Sygnum noted a significant market cap difference between Ether (ETH) and Solana (SOL), currently over $218 billion, according to CoinGecko data. Some of Solana’s volume metrics are overstated, and much of the network revenue is influenced by memecoin issuance and trading, Sygnum claims. Edward Snowden recently criticized Solana for being too centralized, suggesting that significant projects on the network could be easily disrupted if states intervene. Currently, Ethereum dominates the real-world asset tokenization and stablecoin markets with an 81% and 49% market share, respectively, while Solana holds less than a 3% share in each market.
Sygnum noted that the Solana to Ether price ratio is up 300% year-on-year and 600% since 2023. However, Ether may be poised for a 'sharp reversal' after two years of underperformance and negative sentiment. While Ethereum’s technical roadmap may confuse some, Sygnum believes Ether is more relatable for traditional investors than Bitcoin because it derives value from economic activity on the network and resulting revenues, akin to an equity investment. Risks of the US securities regulator labeling Ether as a security fell substantially after it closed its Ethereum investigation in June. On the other hand, many crypto executives believe the US securities regulator still views Solana as a security. Sygnum concluded that for Solana to successfully challenge Ethereum in the long run, it needs to shape future technological cycles and become the birthplace of groundbreaking decentralized applications that drive widespread adoption. Sygnum, which claims to be the 'world’s first digital asset bank,' holds roughly $4.5 billion in client assets and has hubs in Zurich, Switzerland, and Singapore.
