Retail investors are recognizing Solana’s potential as a rival to Ethereum in smart contracts.
According to research published by VanEck on September 25, Solana’s superior speed and transaction processing metrics are the primary factors driving the prediction that it may reach $330 and balloon to 50% of Ethereum’s current market capitalization.
Solana Edging Over Ethereum
Solana’s throughput was the subject of the report. Solana is capable of processing thousands of transactions per second (TPS), which is three thousand percent more than Ethereum’s TPS.
The number of daily active users on the Solana network is 1,300% higher than that of Ethereum, and transaction fees are over 5 million percent lower than on Ethereum. For the purpose of making payments and sending money, the authors of the paper argued that Solana has a substantial edge over Ethereum due to its significant advantage in terms of speed and cost effectiveness.
The authors specifically identified stablecoins as important drivers of decentralized finance activity. These stablecoins have the potential to utilize Solana’s higher processing metrics, which would allow them to pass on cost savings to users.
The authors stated that retail investors were “slowly waking up” to the fact that Solana had the ability to rival Ethereum as a smart contract platform. They were also perplexed by the fact that institutional investors have not yet begun to recognize the benefits that Solana comes with.
The research hypothesized that institutions’ slow adoption of Solana could be due to their reluctance to switch from traditional assets like Ethereum to the relatively new cryptocurrency known as Solana.
VanEck analyzes Ethereum’s dismal price action
At an earlier point in time, in September 2024, VanEck published research that detailed the variables that are causing Ethereum’s price to decrease.
According to the VanEck investigation’s findings, the extraction of value from Ethereum layer-2 networks is the primary factor responsible for Ethereum’s less than satisfactory price performance.
Ethereum’s Dencun upgrade in March 2024 significantly reduced the transaction costs for Ethereum layer-2 networks, leading to an increase in the number of scaling solutions for Ethereum layer-2.
Because of the rapid expansion of these second-layer applications and the significant decrease in transaction fees, Ethereum layer-1 income has dropped by 99% since March 2024.
The combination of these two factors led to this situation. The Ethereum network fees, on the other hand, were able to revive themselves in the latter half of September 2024.
VanEck also expressly mentioned that a user shift to quicker layer-1 networks such as Solana and Sui (SUI) was another important cause that was depressing Ethereum’s price and transaction revenue.
According to the VanEck research, Ethereum continues to have a first-mover advantage; however, this advantage is rapidly diminishing.
