Solana Surpasses Ethereum in Market Dominance to Achieve Record Highs
The recent market movements have seen the SOL/ETH ratio hitting new highs, with SOL taking the lead in the market’s relief rally. SOL has surged by 33% to $147 from its low of $110 on Sunday, outpacing BTC’s 12% increase and ETH’s 8% rise. This strong rebound has propelled the SOL/ETH ratio to a new all-time high of .062, marking an over 800% increase from the lows witnessed in December 2023 following FTX’s collapse.
The price surge has also had a notable impact on Solana’s total-value locked (TVL), which has seen a 10% increase this month. In contrast, Ethereum’s TVL has decreased by 14%, while Tron, the chain with the second-highest TVL, has remained relatively stable.
Solana’s growing prominence is reflected in its DeFi ecosystem’s expansion. Jito, a liquid staking and MEV product on Solana, stands out as the leading DeFi protocol, boasting an annualized revenue of $192 million and a TVL of $1.74 billion, marking a 168% surge since January 1. Additionally, Raydium, Solana’s primary decentralized exchange (DEX), has surpassed the previous leader Jupiter in March, driven largely by the success of the memecoin launchpad Pump.Fun.
Tokens launched on Pump.Fun witness their liquidity transferred to Raydium upon reaching a specific market capitalization threshold. The popularity of memecoins on Solana has fueled rapid growth in Raydium’s TVL. Despite the growth in Solana’s DeFi ecosystem and token value, it still lags behind Ethereum’s DeFi dominance. Ethereum’s leading liquid staking solution, Lido, commands a substantial $24 billion in TVL, while Uniswap’s $5.5 billion volume last month surpasses Raydium’s $1.28 billion by more than four times.
Ethereum has notably underperformed in 2024, with only a 4.36% increase since the year began, compared to BTC’s 32% and SOL’s 45% growth. Optimism surrounding Ethereum ETFs as a potential catalyst to boost ETH’s price has been dampened by mass selling from entities like Grayscale and Jump Trading post the ETFs’ launch on July 23. This selling pressure has impacted investor sentiment, resulting in net outflows of $364 million, contrary to initial expectations.
Despite prevailing negative sentiment, this week has seen positive ETH ETF flows totaling $147.2 million, suggesting a potential bottom formation for the asset. In a contrasting development, VanEck’s proposal for a Solana ETF is still pending approval, awaiting further regulatory clearance.
