Solana (SOL) was buying and selling at 97% low cost to the market capitalization of Ethereum’s ether (ETH) in January 2023 — a transparent market dislocation that has closed considerably during the last two years.
Right this moment, the low cost has shrunk to 70%.
Nevertheless, Solana is beginning to problem Ethereum by way of on-chain exercise and key measures of community utilization.
Which raises the query: Is the market nonetheless dislocated?
On this quick piece, we discover this key query with relative evaluation throughout 4 key information factors. Let’s dive in.
1. Community Charges
Knowledge: Artemis, The DeFi Report, Fuel Charges Solely (doesn’t embrace MEV). Please observe that we’ve included the next L2s within the comps information: Arbitrum, Base, Optimism, Blast, Celo, Linea, Mantle, Scroll, Starknet, zkSync, Immutable, and Manta Pacific.
Layer 2s create new demand for block house on the Ethereum layer 1 and improve the community results of ETH the asset. Subsequently, we embrace them in our comparatrive evaluation for SOL.
Within the second quarter, Solana did $151 million in charges, which is 27% of Ethereum plus its prime layer 2s.
Quick ahead to the final 90 days and the ratio has jumped to 49%.
2. DEX Volumes
Knowledge: Artemis, The DeFi Report
Solana did $108 billion in decentralized change, or DEX, buying and selling quantity within the second quarter, or 36% of Ethereum and its prime L2s. Over the past 90 days, Solana is as much as $153 billion and 57%, respectively.
3. Stablecoin Volumes
Knowledge: Artemis, The DeFi Report
Solana did $4.7 trillion in stablecoin quantity within the second quarter: 1.9 occasions Ether and the highest L2s.
Over the past 90 days, solana did $963 billion of quantity: 30% of ether and the highest L2s.
Why the drop?
We expect that is largely as a consequence of bots/algorithmic buying and selling that have been juicing the numbers within the second quarter.
Moreover, solely 6% of Solana’s stablecoin volumes are peer-to-peer transfers, per Artemis. On the Ethereum L1, this determine is nearer to 30% — a sign that Ethereum is used extra for non-speculative exercise than Solana.
When it comes to stablecoin provide, Solana has simply 4.1% of Ethereum and its prime L2s, up from 3.5% on the finish of the second quarter.
4. Complete Worth Locked (TVL)
Knowledge: Artemis, The DeFi Report
Solana ended the second quarter with $4.2 billion of whole worth locked (TVL): 6.3% of ether + the highest L2s.
Solana’s TVL is presently $8.2 billion: 12% of ether + the highest L2s.
In abstract, based mostly on 90-day efficiency, Solana now has:
- 49% of Ethereum’s charges (up from 27% on the finish of Q2)
- 57% of Ethereum’s DEX volumes (up from 36% finish of Q2)
- 30% of Ethereum’s stablecoin volumes (down from 190% in Q2)
- 4.1% of Ethereum’s stablecoin provide (up from 3.5% finish of Q2)
- 12% of Ethereum’s TVL (up from 6% finish of Q2)
We expect the on-chain information factors to a good re-pricing of SOL’s valuation relative to ETH.
With that stated, buyers ought to take into account qualitative variations between the 2 networks in addition to potential upcoming catalysts as we head into year-end and 2025.
