Solana's Impressive Comeback, a Real Threat to Ethereum's Supremacy?

With its SOL token back well above 100 dollars, Solana marks a resounding comeback and positions itself as a formidable opponent to Ethereum’s dominance. Let’s dissect the mechanisms of this resurgence.

Does Solana’s Shadow Loom Over the Realm of Ethereum?

Launched in 2020, Solana bets everything on speed. Its blockchain can process 65,000 transactions per second, compared to a mere 15 for Ethereum. A considerable advantage for attracting decentralized finance (DeFi) projects and cryptocurrencies.

In 2021, this argument captivated the masses. SOL surged spectacularly, from $1 in January to $260 in November. Its proponents even announced that Solana was on track to overtake Ethereum in the smart contracts market.

However, the FTX debacle changed the game. The crash of Sam Bankman-Fried‘s platform, closely linked to Solana, sent SOL below $10. The blockchain also faced criticism for its technical vulnerabilities. Its future seemed uncertain.

A Spectacular Comeback

Yet, the tide began to turn at the start of 2023. SOL rebounded sharply to $20 after the FTX collapse, and then surpassed $100 in mid-February.

Several factors explain this rebound. On one hand, investors are returning to cryptocurrencies after difficult months. On the other hand, new projects are emerging on Solana, attracted by its low transaction fees.

Trading volumes are surging, fueled by risky speculation. Last weekend, Solana even overtook Bitcoin and Ethereum in terms of spot transaction volume in SOL/USDT, reaching an impressive $1.037 billion on Binance.

Does this spectacular comeback mean that Solana is threatening the dominance of Ethereum? Not yet. With 29 billion dollars of assets locked, Vitalik Buterin‘s blockchain remains well ahead. Solana is worth 15 times less, at 1.5 billion according to data from DefiLlama, despite its rapid growth.

Nevertheless, this contender poses a serious threat. Solana continues to attract projects thanks to its low fees and record speed. If it overcomes its stability issues, it could continue to gain market share from Ethereum in the coming years. Their rivalry promises to be thrilling.