A notable surge in activity puts analysts’ eyes back on Ethereum. Can the Ethereum network catch up to and surpass Solana?

2024-12-02 08:29:05 Primitive Reading

From cointelegraph by Marcel Pechman

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The Ethereum network has long been criticized for high transaction fees, which often exceed $4. However, the exponential growth of layer-2 blockchains has created a sustainable solution for decentralized applications (DApps) that require higher scalability. This ecosystem saw a 70% increase in volumes over the past 30 days, but can it match Solana’s success?

Decentralized exchanges 30-day volumes, market share. Source: DefiLlama

While Solana may have surpassed Ethereum's base layer activity, it still falls short when considering Ethereum's layer-2 blockchains. Solana captured 35.4% of the decentralized exchange (DEX) volumes in November, up from 27.2% in October, according to DefiLlama data. In comparison, Ethereum and its layer-2 ecosystem accounted for 45.2% of the market share in November, down from 50.1% in October.

In terms of deposits, Ethereum's base layer has a clear advantage with $69.7 billion in total value locked (TVL), compared to Solana's $9.2 billion. More notably, some of Ethereum's layer-2 solutions, such as Base and Arbitrum, are already each at $3 billion in TVL. In total, the Ethereum layer-2 ecosystem has reached a TVL of $11.4 billion, according to DefiLlama data.

Blockchains ranked by total value locked, USD. Source: TradingView

There is no doubt that Solana has emerged as a major player, securing the second position in terms of deposits. However, Ethereum’s dominance remains unchallenged. Additionally, the impressive growth of Base, an Ethereum layer-2 solution founded and controlled by the Coinbase exchange, offers promising prospects, particularly in the memecoin sector.

Memecoins have been a key catalyst for Solana’s adoption and growth, with several tokens surpassing $1 billion in market capitalization. Pump.fun has significantly altered the creation of liquidity pools for new token launches, leading to a substantial increase in trading activity on platforms like Raydium and Orca, which collectively amassed $24.6 billion in volumes over the past seven days.

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