In a significant development within the cryptocurrency market, Solana’s token has seen a 70% increase in value against Ethereum in 2024, positioning itself as a formidable competitor to Ether despite having a market cap that’s roughly one-third of Ethereum’s.
The conversation around Solana potentially surpassing Ethereum is fueled by optimistic on-chain data, SOL’s lead in decentralized exchange (DEX) metrics, trading volume, and protocol earnings. A notable milestone was reached on Monday, November 18, when the SOL/ETH ratio hit a new peak of 0.07977.
Indications That Solana May Eclipse Ethereum
The protocol fees of Solana, which are minor charges from transaction values gathered for the upkeep and operation of the blockchain, were almost double those of Ethereum in November 2024. Though the month’s data isn’t fully reported, the figures up to Tuesday, November 19, show Solana amassing $343.96 million in protocol fees compared to Ethereum’s $178.65 million. These fees contribute directly to a blockchain project’s revenue after liquidity providers are compensated, suggesting Solana could be generating more revenue than Ethereum for October and November 2024.
Another critical indicator is the transaction volume on decentralized exchanges. Solana’s DEX volume nearly doubled Ethereum’s in November, with October’s figures showing Solana slightly ahead. Solana’s DEX volume reached 77.51 billion against Ethereum’s $38.81 billion for November, and $52.5 billion against Ethereum’s $41.4 billion for October. This higher DEX volume reflects greater utility and adoption for Solana, likely driven by the influx of new projects on the Pump.fun launchpad, which are listed on DEXes like Raydium after meeting specific criteria.
Despite Ethereum’s dominance in circulating stablecoin supply and the total value locked (TVL) on its blockchain, Solana is making strides in these areas, potentially narrowing the gap thanks to its first-mover advantage erosion with continued adoption and demand.
Strategies for Solana to Surpass Ethereum
The Solana ecosystem is witnessing the introduction of new stablecoins, which could enhance its circulating stablecoin supply and TVL. For instance, the Sky protocol, previously known as Maker, has introduced its USDS stablecoin on Solana, marking a significant milestone for DeFi-native stablecoin launches on the platform.
Additionally, Solayer’s recent launch of sUSD, a stablecoin backed by real-world assets and initially pegged to U.S. Treasury bills, differentiates it from other stablecoins and could bolster Solana’s position.
Such developments may enable Solana to counter Ethereum’s network effect and early lead, potentially leading to a future “flippening.”
Implications for Crypto Portfolios
The ascent of Solana, particularly against Ethereum, has likely spurred growth in its ecosystem tokens, notably meme coins, which have seen their market cap exceed $22 billion. This trend benefits crypto portfolios holding such assets alongside Solana.
Conversely, Ethereum’s focus areas like Layer 2 and Layer 3 projects are facing challenges in gaining momentum, which may lead to unrealized losses for investors holding these tokens as Ethereum faces stiff competition from alternatives like Solana.
Solana’s New Highs and Future Price Potential
Solana reached a new high against Ethereum on November 18, signaling potential for further gains. Currently trading above key exponential moving averages and showing a positive trend for nearly five months, technical indicators support a bullish outlook for SOL/ETH.
With a high correlation coefficient with Bitcoin, Solana’s price movements are expected to mirror Bitcoin’s closely. However, traders should remain cautious of market corrections in Bitcoin, which could impact Solana’s value.
This dynamic landscape underscores the evolving nature of the crypto market, with Solana’s rise illustrating the fluid competition and potential for shifts in dominance among leading cryptocurrencies.
