A recent report from MarketVector, a research branch of VanEck, suggests that Solana may be undervalued based on its technical achievements. It could potentially reach 50% of Ethereum’s market cap.
To achieve these gains, Solana needs to focus on its strengths. Fast transaction speeds and low fees are key. However, it must also tackle Ethereum’s “first-mover advantage.”
Solana’s Technical Achievements
The MarketVector report offers a positive outlook for Solana. It compares Solana to Ethereum across various performance metrics. The report highlights several advantages that could position Solana for significant growth. It claims that Solana has the potential to reach 50% of Ethereum’s market cap, but this requires careful strategy.
Solana has shown remarkable growth, driven by major technological advancements. These developments, combined with increased institutional interest, have raised Solana’s profile in the market. VanEck supports this momentum with solid user data that illustrates the asset’s rising importance.
“When comparing Ethereum and Solana, the data is striking. Solana processes 3,000% more transactions than Ethereum, has 1,300% more daily active users, and its transaction fees are nearly 5 million percent cheaper. These differences highlight Solana’s efficiency and scalability,” the report states.
Despite these advantages, Solana’s market cap is currently only 22% of Ethereum’s. VanEck attributes much of this gap to Ethereum’s established position and its institutional adoption, especially seen in the Ethereum ETF. However, the report suggests that these advantages may not guarantee Ethereum’s dominance forever. To close the gap, Solana should focus on its competitive strengths.
The report identifies decentralized finance (DeFi), stablecoins, and payments as key areas where Solana can compete with Ethereum. Surpassing Ethereum in speed and efficiency is crucial in these rapidly growing markets.
“Another major use case is lending and borrowing within the DeFi space, which is expected to keep growing quickly. Payments and remittances also hold significant potential, especially with Solana’s lower fees and faster transaction times. If institutions and everyday users can save money through cheaper, quicker transactions, Solana’s user base could expand even faster,” VanEck notes.
Currently, Solana is excelling in several areas. Data from CoinGecko shows that various meme coins based on Solana are outperforming those on Ethereum. While pet-themed cryptocurrencies have surged in 2024, those on Solana are seeing even higher growth.
However, Ethereum won’t give up its market share easily. As reported by BeInCrypto, Ethereum outperformed Bitcoin in a late September rally, indicating potential for future gains. Although Bitcoin’s ETFs may be performing better than Ethereum’s, ETH is still gaining momentum. Solana faces a challenging path to reach 50% of Ethereum’s market cap, but it remains an achievable goal.