Solana: the moment of the Ethereum-killer has arrived

In the last few days, Solana has surpassed Ethereum. 

However, this is not a general overtaking, so much so that for example, in terms of market capitalization, ETH’s is still almost ten times higher than SOL’s. 

The overtaking, instead, occurred in a specific context, and as far as a single parameter is concerned. 

Decentralized Exchanges: Solana vs Ethereum

According to DefiLlama data, daily trading volumes on Solana DEX have reached those of Ethereum DEX.

On the contrary, on Friday for the first time in history, the daily trading volume on DEX on Solana exceeded that of DEX on Ethereum.

Note that these are relatively small volumes, around one billion dollars. For example, the daily trading volumes of ETH on centralized exchanges exceed 8 billion dollars, while those of SOL are less than 2 billion. 

Furthermore, it should be noted that the data related to DEX does not only concern the exchange of ETH and SOL cryptocurrencies, but also all the other tokens present on the Ethereum and Solana blockchains. 

In particular, the recent boom in trading on Solana’s DEX is mainly due to the boom of the Bonk token.

The incredible hype about Bonk

Taking into consideration the overall trading volumes of Bonk on both DEX and decentralized exchanges, the all-time peak occurred precisely between December 15th and 16th. 

Bonk is a token on Solana launched in December of last year, and had never exceeded $200 million in daily trading volume until December 8th.

Actually, to tell the truth, if we exclude the initial weeks, afterwards it didn’t even exceed 10 million until the end of October. 

Starting from the end of October, with the awakening of the crypto markets, both trading volumes and price have skyrocketed. 

On December 13th, volumes had risen to $350 million, and the following day they had already skyrocketed to $680 million. 

The peak on December 15/16 first saw a surpass of 3 billion dollars, and then a decline to 2.6 billion. These numbers alone are able to justify the surpass of daily trading volume on the Solana DEX compared to the Ethereum DEX.

The return to normality

In fact, yesterday the trading volume of Bonk tokens dropped to 1.1 billion dollars, and the daily trading volume on DEXs on Ethereum has returned higher than that on Solana. 

Since Bonk is a token that “awakens” before Christmas, this trend is destined to quickly fade away, and yesterday’s decline seems likely to persist today. 

Therefore, it was an exceptional circumstance not specifically related to Solana but to a token issued on the Solana blockchain, and therefore exchangeable on Solana DEXs and not on Ethereum ones. 

For example, considering other parameters such as TVL, Ethereum continues to dominate undisputedly, with 55% of the entire DeFi TVL DeFi.

Although it is slightly down compared to the 56% at the beginning of the month, it is still more than the sum of the TVL of all the other chains put together. 

In addition, Solana is not even on the podium from this point of view, because compared to 28 billion dollars of TVL on Ethereum, 8 billion on Tron, and 3 billion on BCS, Solana is only in fifth place with just over one billion. 

The same market capitalization of Bonk is just over one billion dollars, and this indicates that there are not many BONK tokens locked on DEX.

Solana is challenging Ethereum

Despite this, it can still be said that SOlana is somehow challenging Ethereum. 

While Ethereum in general seems untouchable at the moment, there are niches where Solana or other chains can perform better.

In particular, they perform better where it is more important for fees to be contained. For example, on DEXs it can be a problem if the average transaction fees are around $10, as is the case with current transactions on Ethereum. 

Solana allows for faster transactions and significantly lower costs, so it’s no wonder that tokens like Bonk, which are not appealing to large investors, are now being issued on blockchains like Solana and traded there, perhaps on DEX platforms. 

Moreover, Bonk has only recently been added to the main centralized exchanges, while until just a few days ago it could practically only be traded on DEX. 

Note that the trading volume of Bonk in the last 24 hours on all exchanges has dropped below 700 million dollars, so the phenomenon mentioned above seems to have run its course. 

Source: https://en.cryptonomist.ch/2023/12/18/solana-the-moment-of-the-ethereum-killer-has-arrived/