Solana’s Dominance Versus Ethereum Reaches New Highs

The SOL/ETH ratio reached new highs this week with SOL leading the market’s relief rally.

SOL is up 33% to $147 from Sunday’s low of $110, compared with BTC which is up 12% and ETH which is up 8%. The strong rebound has also sent the SOL/ETH ratio to a new all-time high of .062, up over 800% from the lows set in December 2023 after FTX collapsed.

As a result of the price surge, Solana’s total-value locked (TVL) is up 10% on the month, while Ethereum’s is down 14% and Tron, the chain with the second-highest TVL, remains relatively flat.

Solana DeFi

As Solana continues to draw more attention, its DeFi ecosystem is following suit.

Jito, a liquid staking and MEV product on Solana is its leading DeFi protocol, with an annualized revenue of $192 million and $1.74 billion in TVL, up 168% from January 1.

Solana’s leading decentralized exchange (DEX), Raydium flipped the former leader Jupiter in March, driven largely by the success of memecoin launchpad Pump.Fun.

Tokens that launch on Pump.Fun see their liquidity burnt to Raydium if they reach a market capitalization threshold. Given the popularity of memecoins on Solana, Raydium’s TVL experienced rapid growth as a result.

While Solana’s DeFi ecosystem is scaling alongside the chain’s token value, it is still dwarfed by Ethereum DeFi. Ethereum’s leading liquid staking solution, Lido touts a staggering $24 billion in TVL, and Uniswap’s $5.5 billion in volume last month is more than four times Raydium’s $1.28 billion.

Ethereum’s Underperformance

ETH has been a notoriously slow performer throughout 2024. ETH is up just 4.36% since the beginning of 2024 compared to BTC’s 32% and SOL’s 45%.

Throughout Q1 and Q2, many analysts predicted Ethereum ETFs would be the catalyst that could spur ETH’s price to catch up to the other major tokens. However, since the ETFs went live on July 23, the price has been suppressed by mass selling from entities such as Grayscale and Jump Trading, which is taking its toll on investors sentiment.

Overall the ETFs have resulted in a net outflows of $364 million, the opposite effect of what many optimists had looked forward to when the funds were approved.

Despite the overwhelmingly negative sentiment, the ETH ETF flows this week are positive, with a total of $147.2 million in inflows according to Farside Investors, which may indicate that a bottom is forming on the asset.

Meanwhile, VanEck’s request to issue a Solana ETF still awaits approval.