Solana is showing potential to rival Ethereum in the future, particularly if major financial institutions begin to favor the blockchain for real-world asset tokenization platforms and stablecoins, according to Swiss crypto bank Sygnum. While Solana still has significant ground to cover, a shift toward its scalability could reshape the competitive landscape.
Financial Institutions Eye Solana
In an Oct. 1 report, Sygnum Bank noted that some “conservative institutions” are increasingly interested in Solana’s high throughput and low transaction costs. This could position Solana as a serious competitor to Ethereum, especially in areas like payments and asset tokenization.
- PayPal and Visa: A PayPal executive recently suggested that Ethereum may not be the best solution for payments, favoring Solana’s speed and efficiency. Similarly, Visa has integrated Solana for processing USD Coin payments, praising its “high throughput” and “low costs.”
- Franklin Templeton and Citi: Franklin Templeton, a trillion-dollar asset manager, announced plans to launch a mutual fund on Solana. Additionally, Citibank is considering Solana for its cross-border payment solutions, which could further elevate Solana’s standing.
However, Ethereum continues to hold a substantial lead. As of now, Ethereum boasts a market cap exceeding $218 billion, while Solana has less than 3% market share in key sectors like real-world asset tokenization and stablecoins, where Ethereum dominates with 81% and 49% of the market, respectively.
Challenges for Solana
Despite its growing attention, Solana faces skepticism. Sygnum cautioned that some of Solana’s transaction volumes might be inflated by memecoin trading and issuance, which skews the actual value being generated on the network. Former intelligence contractor Edward Snowden has also voiced concerns about Solana’s centralization, arguing that the network could be vulnerable to disruption if governments take action against it.
Ethereum’s Position and Potential Rebound
While Ethereum currently leads the blockchain space, its technical roadmap has created confusion for some. However, Sygnum believes Ethereum’s fundamental value remains strong, especially for traditional investors. Unlike Bitcoin, which is often viewed as “digital gold,” Ether’s value is tied to economic activity on the network, making it more relatable for investors accustomed to evaluating growth, profits, and cash flows—similar to equity investments.
Sygnum also highlighted that risks related to U.S. securities regulators labeling Ether as a security have diminished, following the closure of the SEC’s Ethereum investigation in June 2023. This significantly reduces regulatory risks for Ethereum, giving it an edge over Solana, which some crypto executives believe is still viewed as a security by U.S. regulators.
Long-Term Outlook
For Solana to truly challenge Ethereum in the long run, Sygnum believes it must become the hub for innovative decentralized applications that capture public interest and drive adoption. This could involve leading the next wave of technological advancements in the blockchain space, pushing it closer to Ethereum’s dominant position.
Sygnum, which claims to be the “world’s first digital asset bank,” manages around $4.5 billion in client assets, with operations based in Zurich, Switzerland, and Singapore.
