Solana Poised to Challenge Ethereum as Institutions Explore New Blockchains

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A new report from Sygnum Bank suggests that Solana may be positioning itself as a serious competitor to Ethereum in the long run, particularly in the realms of real-world asset tokenization and stablecoin markets.

According to the Swiss crypto bank, even traditionally conservative institutions are showing interest in Solana due to its scalability. This comes despite Ethereum’s well-established reputation for stability and security.

SOL Adoption in Recent Months

In recent months, key players like PayPal and Visa have integrated Solana for its high throughput and low transaction costs, signaling growing confidence in the blockchain.

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Visa, for instance, has adopted Solana for USD Coin (USDC) settlements, and Franklin Templeton, a trillion-dollar asset manager, has announced plans to launch a mutual fund on the network. Sygnum’s report points out that Citigroup is also considering using Solana for cross-border payments, further demonstrating its increasing appeal.

Challenges Remain

While Solana’s performance has been impressive, particularly when compared to Ethereum, challenges remain. Despite its recent growth, the market cap gap between Solana and Ethereum remains vast—over $218 billion, according to CoinGecko.

Additionally, some of Solana’s volume metrics are inflated, driven largely by memecoin trading, Sygnum claims. This raises concerns about the true sustainability of its current growth trajectory.

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Criticism of Solana’s centralization has also surfaced, with whistleblower Edward Snowden expressing concerns about how easily significant projects on Solana could be disrupted. In contrast, Ethereum still dominates the tokenization and stablecoin markets, holding 81% and 49% of market share, respectively. Solana, by comparison, captures less than 3% of these markets, a stark reminder of Ethereum’s entrenched dominance.

Sygnum’s Outlook on Ethereum and Solana

Sygnum remains cautiously optimistic about Ethereum’s future, noting that while Solana has outperformed Ether in recent months, Ethereum could soon see a sharp reversal in its fortunes.

Ethereum’s complex technical roadmap may confuse some, but its economic activity and network revenues give it more traditional appeal compared to Bitcoin, according to Sygnum. Moreover, the risks of Ether being labeled a security by U.S. regulators have decreased significantly since an investigation into Ethereum was closed earlier this year.

Ultimately, while Solana’s momentum is undeniable, Sygnum concludes that for Solana to truly challenge Ethereum over the long term, it will need to foster groundbreaking decentralized applications that drive widespread adoption.