Institutional Trend Positions Solana to Contest Ethereum’s Dominance, Says Sygnum Bank

In a recent report, Sygnum Bank highlighted a burgeoning trend that could see Solana emerging as a serious contender to Ethereum’s dominance in the blockchain space. 

Ethereum is traditionally regarded for its stability and security. However, it now faces growing competition as even conservative institutions begin to favor Solana’s impressive scalability.

Institutions Favoring Solana

The shift in sentiment is underscored by remarks from José Fernández, a PayPal executive, who suggested that “Ethereum is not the best solution for payments.” This statement echoes a broader sentiment within the industry, as major players recognize the advantages Solana offers for transaction processing.

Adding to the momentum, Visa has integrated Solana for USDC stablecoin settlements, promoting its low transaction costs and high throughput. The move signals a notable endorsement of Solana’s capabilities in handling large-scale transactions.

Moreover, asset manager Franklin Templeton has disclosed that it will launch a mutual fund on the Solana network, further validating its potential within institutional finance. 

Sygnum also referenced Citi’s exploration of Solana for cross-border payment solutions, noting that the network is garnering serious consideration from major financial entities.

In addition, a September report from leading crypto asset manager Grayscale highlighted Solana as a significant competitor to Ethereum in smart contracts. Grayscale noted that Solana has gained substantial traction this year.

Highlighted Concerns about Solana

Despite this positive outlook around Solana, Sygnum Bank noted that some of Solana’s transaction volume metrics might be inflated. It attributed much of the network’s revenue to the trading of meme coins rather than fundamental use cases.

Famous Bitcoin commentator Edward Snowden recently expressed concerns about Solana. He argues that Solana is centralized and that any major developments on the network could be easily undermined if governments start to take an interest in it.

Gap Between ETH and SOL

Notably, Sygnum Bank also cited a substantial market cap gap between Ethereum (ETH) and Solana (SOL) exists. 

Ethereum has a market cap of $287 billion and a daily trading volume of over $15.7 billion. On the other hand, Solana commands a valuation of $66.14 billion with an intraday volume of $2.53 billion. 

To put this in perspective, Ethereum’s market cap is more than four times that of Solana. If Solana were to expand by 400% while Ethereum remained stable, it would still fall short of Ethereum’s valuation. This seeks to highlight the considerable challenge Solana may face in competing with Ethereum regarding price.