An emerging trend could see Solana ‘seriously challenging Ethereum: Symnum’.
According to the Swiss Crypto Bank, financial institutions that choose to release real-world asset token platforms and stablecoins on Solana may end up using the blockchain to “significantly challenge Ethereum” in the long run.
Recently, there are signs that even “conservative institutions” may prefer Solana's expansion to Ethereum's stability and security benefits, Sygnum Bank said in an October 1 report.
“A PayPal executive recently said at a Solana event that ‘Ethereum is not the best solution for payments.'”
Competing payment processing firm Visa recently integrated Solana for USD Coin (USDC) settlements, boasting “higher returns” and “lower costs,” Signum noted.
Trillion-dollar asset manager Franklin Templeton has announced plans to launch a mutual fund on Solana, and Sigma Citi has revealed it is considering Solana for cross-border payments.
Source: Signum Bank
But Sygnum stated that there is still a large market value between Ether (ETH) and Solana (SOL), which is currently more than $218 billion, according to CoinGecko data.
Additionally, some of Solana's volume metrics are highly inflated, and most of the network's revenue is largely influenced by memecoin withdrawals and trading, Sygnum said.
Former US intelligence contractor and whistleblower Edward Snowden recently criticized Solana for being too centralized, saying that “anything useful” built on the network could easily be disrupted if “states start moving towards it”.
Today, Ethereum is still a real-world asset tokenization and stable coin markets with a stable 81% and 49% market share, onchain data shows. Solana has less than 3% share in each market.
Solana strongly outnumbers Ether… for now
Sygnum saw Solana's price to ether reach 300% year-to-date and 600% since 2023 in an October 1 report.
Solana Ether price ratio as of September 2023. Source: Signum Bank / CoinMarketCap
However, Ether could be in for a “sharp reversal” after two years of high performance and negative sentiment, Sygnum said.
Although Ethereum's technical roadmap is confusing to many, Signum believes that Ether makes more sense for traditional investors than Bitcoin (BTC) because it is easier to value:
“Ether derives most of its value from economic activity on the network and revenue generated. [It] It's similar to equity investing where growth, profit and cash flow are evaluated – this is more relevant to traditional investors than the concept of digital gold.
The risk of the U.S. securities regulator designating Ether as a security has “significantly” decreased since it closed its investigation into Ethereum in June. 19, observed Signum.
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On the other hand, many crypto executives believe that the US securities regulator still considers Solana a security. Signum concluded that:
“Ultimately, for Solana to successfully challenge Ethereum in the long term, it must be a hotbed of decentralized applications that capture the market's imagination and drive widespread adoption, shaping future technology cycles.”
Sygnum — which claims to be “the world's first digital asset bank” — holds nearly $4.5 billion in client assets, the company said in a July 25 report.
The crypto bank has two centers in Zurich, Switzerland and Singapore.
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