VanEck’s recent report, published on September 25, predicts that Solana (SOL), currently valued at $150, could soar to $330, potentially reaching 50% of Ethereum’s (ETH) market cap, currently at $2,612. This optimistic outlook is largely attributed to Solana’s superior speed and transaction efficiency.
The report highlights Solana’s remarkable throughput, boasting the ability to process thousands of transactions per second (TPS)—3,000% higher than Ethereum’s TPS. Additionally, Solana has 1,300% more daily active users compared to Ethereum, and its transaction fees are significantly cheaper, by nearly 5 million%.
According to the authors, Solana’s clear advantages in speed and cost efficiency position it favorably for payments and remittances, with stablecoins identified as key drivers in decentralized finance that can benefit from Solana’s exceptional processing capabilities.
The report also notes that retail investors are gradually recognizing Solana’s potential to challenge Ethereum as a smart contract platform, while institutional investors have yet to fully appreciate these advantages. This reluctance may stem from a preference for established assets like ETH over newer options like Solana.
VanEck’s Analysis of Ethereum’s Struggles
In a prior report from September 2024, VanEck detailed the factors suppressing Ethereum’s price. Their analysis indicated that the underperformance is largely due to value extraction from Ethereum’s Layer 2 networks.
The explosive growth of Layer 2 scaling solutions followed Ethereum’s Dencun upgrade in March 2024, which significantly reduced transaction fees. This surge in Layer 2 projects led to a staggering 99% drop in Ethereum’s Layer 1 revenue since March. However, Ethereum’s network fees began to recover successfully by late September 2024.
VanEck also noted that user migration to faster Layer 1 networks like Solana and Sui (SUI) has contributed to Ethereum’s price suppression and declining transaction revenue. While Ethereum still maintains a first-mover advantage, this edge is rapidly diminishing.
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