Over the past 24 hours, Solana’s native token, SOL, has experienced a 4% surge, currently trading at $138 and inching closer to its previous resistance levels.
This recent price increase has reignited discussions about Solana’s potential to rival Ethereum. While Ethereum remains the dominant force in the market, Solana is steadily making progress and gaining traction.
So, is Solana’s momentum strong enough to shift the focus of stakeholders and lead to a retest of its all-time high?
SOL’s Growth Mirroring ETH’s Early Days
With 39.3 million daily active addresses, Solana has outperformed Ethereum by a significant margin of 11,228%, compared to Ethereum’s 350,000 active addresses. This indicates a growing interest in SOL among users.
Despite this, Ethereum maintains its stronghold in the DeFi sector with a Total Value Locked (TVL) of $44.5 billion, overshadowing Solana’s $4.6 billion TVL.
These numbers shed light on why Ethereum trails slightly behind Bitcoin in terms of market cap. Nevertheless, they also highlight Solana’s remarkable growth trajectory despite being launched five years after Ethereum.
Hence, it is worth exploring whether Solana is on track to replicate Ethereum’s early growth surge given the time disparity between their launches.
Notably, while Ethereum previously led with a $10 billion decentralized exchange (DEX) volume, Solana has significantly closed the gap. In December of last year, Solana surpassed Ethereum by recording $2.9 billion in DEX volume compared to Ethereum’s $1.9 billion.
Essentially, SOL is following a similar growth trajectory in DEX volume as Ethereum did in its early years, achieving comparable milestones within its initial three years. If this pattern persists, Solana could potentially surpass Ethereum in network activity.
However, relying solely on DEX volume does not provide conclusive evidence to support this hypothesis – what comes next?
Solana Leveraging Ethereum’s Weaknesses
Widely regarded as an “Ethereum killer,” Solana was built to address Ethereum’s weaknesses, particularly its high gas fees.
Consequently, SOL has consistently led in daily transactions since its inception, peaking at 37 million daily transactions, a substantial margin compared to Ethereum’s 1.1 million transactions.
The significant DEX volume and the surge in daily transactions underscore the progress made by Solana’s developers in achieving their objectives.
Despite these strong fundamentals, SOL’s market cap still falls short of Ethereum’s by a factor of 4.6x.
Milestones Ahead for Solana
Despite its advantages over Ethereum, Solana still has a considerable journey ahead in surpassing Ethereum’s market cap.
One key concern is the decreasing development activity, indicating a potential level of network complacency. With Ethereum’s imminent transition to 2.0, this might pose a challenge for SOL stakeholders.
Simultaneously, futures traders could be the first to adjust, as seen in the declining open interest (OI), dropping from $2.3 billion to $1.7 billion since Solana last approached the $200 mark.
In conclusion, while Solana has excelled in various aspects since its inception, further platform advancements are essential for achieving a significant market takeover.
If not, with Ethereum’s upcoming upgrades, bridging the gap could become increasingly arduous – reaching $200 might just be the initial hurdle to overcome.