According to a recent report by VanEck’s subsidiary, Market Vector, Solana has the potential to reach 50% of Ethereum’s market cap.
Over 3,000% more transactions are processed on the Solana network than on Ethereum, and there are over 1,300% more daily active users. At the same time, Solana’s transaction fees are also considerably cheaper.
Yet, the question remains. Why haven’t institutions migrated towards Solana? The new report by VanEck’s subsidiary mentions that Solana is currently undervalued. It said that Solana is inherently superior while its market cap is just 22% of Ethereum.
Third-party research revealed that Solana can reach 50% of Ether’s market cap. If that happens, Solana may end up being priced at $300 per token.Another June report outlined Solana as one of the big three besides Ethereum and Bitcoin. The report hinted at the probability of Solana having the next ETFs, with some asset managers filing for Solana ETFs with the U.S. SEC.
Solana receives notable institutional adoption
According to the report, institutional investors have been adopting Solana underwhelmingly. That is despite retail investors realizing and appreciating its advantages over other blockchains.
The report owed the gap in adoption to Ethereum’s early entry into the market in 2014 compared to Solana, which launched in 2018. The gap reportedly contributes to better familiarity formed between institutional investors and the blockchain.
Institutional investors were also reportedly cautious about rotating large portions of their investments from more established cryptocurrencies such as Ether. Avoiding the rotation likewise leads them to miss out on opportunities offered by undervalued assets such as Solana.
The report noted that it was dangerous for market participants not to account for possible market changes, including sudden downturns or the entrance of new competitors. According to the report, investors should be intuitive when holding on to assets in the fast-changing crypto world.
Solana has still shown significant adoption by institutional investors this year, as indicated by multiple announcements made during the Solana Breakpoint event held in Singapore this September. The fourth largest bank in the U.S., Citibank, and the asset management company Franklin Templeton announced their plans to integrate Solana into their financial services.
Stablecoins support Solana’s adoption
Over the past 7 days, Solana has handled over $348B of stablecoin volume on the network. To put this into perspective, this is more than double the amount on Ethereum, which handled $159B of stablecoin volume during this same time period and was the second most overall.… pic.twitter.com/sYRhzvtuYI
— David Alexander II (@Mega_Fund) March 23, 2024
Solana and Ethereum have handled billions of dollars in stablecoin transactions over the years, with Solana showing significant growth in the area. The report highlighted the role stablecoins played in progressing the growth and functionality of the Solana blockchain, similar to Ethereum. Decentralized finance also remained a crucial part of the blockchain, according to the report.
The report particularly mentioned the increasing capabilities offered by decentralized exchanges in creating stablecoins. With their stability, stablecoins are offering an easier and more transferable option for traditional currencies.
The report indicated that Solana’s increasing functionality to handle more use cases, such as lending, borrowing, payments, and remittances, could significantly boost the blockchain’s user base. Solana offers advantages like fast transactions and lower fees that institutions and retail investors could adopt.
The blockchain is notably blending its capabilities with stablecoin companies to offer users stable digital asset options in a cheap and fast ecosystem. The French banking conglomerate Société Générale is planning to deploy its stablecoin, EUR CoinVertible, on the blockchain. Sky, previously Maker DAO, is launching its stablecoin USDS on Solana using the Wormhole interoperability protocol.
Additional reporting by Noor Bazmi
Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot
