Swiss crypto bank Sygnum suggests that Solana could become a serious contender to Ethereum, particularly if financial institutions continue choosing it for real-world asset tokenization platforms and stablecoins.
In an October 1 report, Sygnum noted that some “conservative institutions” may prefer Solana’s scalability over Ethereum’s stability and security.
“A PayPal executive recently claimed at a Solana event that ‘Ethereum is not the best solution for payments.’”
Visa has also integrated Solana for USD Coin (USDC) settlements due to its high throughput and low costs. Franklin Templeton also plans to launch a mutual fund on Solana, and Citi is considering using Solana for cross-border payments.
However, Ethereum still leads in the tokenization and stablecoin markets, with 81% and 49% shares, respectively, compared to Solana’s sub-3% share. One more factor to consider is that Ethereum’s market cap exceeds Solana’s by over $218 billion.
Sygnum also claims that some of Solana’s volume metrics are overstated, and much of the network revenue is largely influenced by memecoin issuance and trading.
Former American intelligence contractor and whistleblower Edward Snowden recently criticised Solana for being too centralised and claimed that “anything significant” built on the network could easily be disrupted “if states begin moving toward it.”
Nevertheless, Solana’s price has surged dramatically, outperforming Ether by 300% year-on-year and 600% since the start of 2023.
Sygnum noted that Ethereum, despite recent underperformance, remains more attractive to traditional investors than Bitcoin due to its connection to economic activity and network revenues, akin to equity investments.
ETH’s risks of being labelled a security have also diminished after the US regulator closed its investigation into Ethereum in June, while Solana still faces potential scrutiny.
Sygnum concluded that for Solana to challenge Ethereum in the long run, it must lead future technological cycles and foster groundbreaking decentralised applications that drive widespread adoption. Sygnum manages $4.5 billion in client assets, operating from hubs in Zurich and Singapore.
