Solana’s [SOL] price surged by more than 4% in the past day, reaching $138 and approaching its previous resistance level.
This recent price increase has reignited discussions about its competition with Ethereum. While Ethereum still holds a dominant position, Solana is making significant progress.
Can Solana’s advancements shift the attention of stakeholders and lead it to test its all-time high?
Solana Following Ethereum’s Early Growth Path
With 39.3 million active daily addresses, Solana has outperformed Ethereum by 11,228%, a substantial increase compared to Ethereum’s 350K active addresses, indicating a growing interest in SOL.
Despite this, Ethereum’s Total Value Locked (TVL) stands at $44.5 billion, significantly higher than Solana’s $4.6 billion, solidifying its position in DeFi.
These numbers illustrate why Ethereum trails slightly behind Bitcoin in market capitalization, but also highlight Solana’s remarkable growth despite being launched five years later.
Therefore, the question arises: Is Solana approaching Ethereum’s early growth spurt, taking into account the time disparity between them?
Interestingly, while Ethereum once led with $10 billion in decentralized exchange (DEX) volume, Solana has made considerable progress in closing this gap. Last December, Solana even surpassed Ethereum, with $2.9 billion in DEX volume compared to Ethereum’s $1.9 billion.
Essentially, SOL is imitating Ethereum’s initial DEX growth, achieving similar milestones within its first three years. Should this trend persist, Solana could potentially surpass Ethereum in network activity.
However, DEX volume alone does not confirm this hypothesis. What comes next?
Solana Leveraging Ethereum’s Weaknesses
Known as an Ethereum competitor, Solana was created to address Ethereum’s weaknesses, notably its high gas fees.
Consequently, SOL has consistently led in daily transactions since its inception, peaking at 37 million daily transactions, significantly higher than Ethereum’s 1.1 million.
The combination of substantial DEX volume and a surge in daily transactions highlights the progress made by Solana developers towards their objectives.
Despite these strong fundamentals, SOL still has a market cap that is 4.6 times lower than ETH’s.
Significant Progress, but Challenges Remain
While Solana has displayed strengths compared to Ethereum, it still faces a steep climb to exceed Ethereum’s market capitalization.
Firstly, the development activity has reached an all-time low, signaling potential complacency in the network. This could be a cause for concern among SOL stakeholders, especially with Ethereum’s upcoming full transition to Ethereum 2.0.
Additionally, futures traders might be the first to back down, as indicated by the declining Open Interest (OI), dropping from $2.3 billion to $1.7 billion since Solana last approached the $200 price level.
In conclusion, while Solana has made strides in various aspects since its launch, it needs to further advance its platform to make a significant impact. Failure to do so, especially with Ethereum’s forthcoming upgrade, might make closing the gap more challenging, with reaching $200 possibly just the initial hurdle.