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Ethereum and Solana will go down as one of the biggest competitors in cryptocurrencies.
ETH bears will say that Vitalik’s modular scaling roadmap, which currently spawns over 100 satellite blockchains, is doomed to create little value for the underlying asset.
After all, what’s the point of pushing on-chain activity away from the mainnet and into smaller networks if that activity doesn’t somehow lead to an increase in ETH price?
Otherwise, Solana has made great strides in focusing the community on one chain, and Solana’s DEX volume now exceeds the DEX volume of Ethereum mainnet and 13 other chains.
The graph above shows Solana’s DEX volume market share for Ethereum and 13 Layer 2 over the past 18 months. This includes Base, Arbitrum, Optimism, Scroll, Mantle, ZKSync, Polygon, Polygon zkEVM, World Chain, Zora, Linea, Blast, Arbitrum Nova.
Over the past two weeks, Solana DEX processed $45.1 billion in trading volume, driven primarily by Raydium’s all-time high. Ethereum and its orbiting network has less than (only!) $40.2 billion in revenue.
We know that memecoin traders account for the majority of that trading volume, whether within Ethereum or on Solana (80% of weekly DEX trading volume on Solana, according to data from Blockworks Research These are meme coins).
However, this is the first time that Solana has handled more weekly DEX volumes than this particular part of the Ethereum ecosystem.
What this means is that public perception of both SOL and ETH (and to some extent all other layer 1-based assets out there) is determined by either:
Meme coin traders are attracted to those ecosystems, resulting in an increase in the price of the native cryptocurrency.
Bitcoin, which currently leads the market, may remain range-bound until the US election, and tracking price gains could be a noisy process.
Therefore, tracking the price ratio between two assets can show a more realistic trend. For example, the ETH/BTC ratio is at its lowest level since April 2021. This reflects the market buying more value in Bitcoin than Ethereum, at least during the current bull cycle.
Meanwhile, as shown in the chart above, both the SOL/ETH and TON/ETH ratios have hit new highs in the past few months, with the former still at that level.
One might wonder, then, whether the crypto market is really efficient and picking the right winners.
To that I would say, “Do you want to be right or do you want to make money?”
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