Financial institutions that choose to roll out real-world asset tokenization platforms and stablecoins on Solana could position the blockchain to “seriously challenge” Ethereum over the long term, according to a Swiss crypto bank.
There have been indications that even “conservative institutions” may prefer Solana’s scalability to Ethereum’s stability and security advantages, Sygnum Bank said in an Oct. 1 report.
“A PayPal executive recently claimed at a Solana event that ‘Ethereum is not the best solution for payments.’”
Competitor payment processing firm Visa recently integrated Solana for USD Coin (USDC) settlement and boasted about its “high throughput” and “low costs,” Sygnum noted.
Trillion-dollar asset manager Franklin Templeton announced plans to launch a mutual fund on Solana. Signum also pointed out that Citi was considering Solana for cross-border payments.
Source: Sygnum Bank
Still, Sygnum noted that a significant market cap difference between Ether (ETH) and Solana (SOL) still exists, currently about $218 billion, according to CoinGecko data.
Additionally, some of Solana’s volume metrics are overstated, and much of the network revenue is influenced by memecoin issuance and trading, Sygnum said.
Former US intelligence contractor and whistleblower Edward Snowden recently criticized Solana for being too centralized, claiming that “anything significant” built on the network could easily be disrupted “if states begin moving toward it.”
Today, Ethereum still dominates the real-world asset tokenization and stablecoin markets with an 81% and 49% market share, respectively, onchain data shows. Solana has less than a 3% share of each market.
Solana strongly outperforming Ether for now
Sygnum noted in an Oct. 1 report that the Solana-to-Ether price ratio is up 300% year-on-year and 600% since 2023.
Solana-to-Ether price ratio since September 2023. Source: Sygnum Bank/ CoinMarketCap
Still, Ether may be primed for a “sharp reversal” after two years of substantial underperformance and negative sentiment, Sygnum said.
While Ethereum’s technical roadmap confuses many, Sygnum said Ether makes more sense for traditional investors than Bitcoin (BTC) because it is easier to value:
“Ether derives most of its value from economic activity on the network and from the resulting revenues. [It] is more akin to an equity investment where growth, profits and cash flows are evaluated – this is more relatable for traditional investors than the digital gold concept.”
Risks of the US securities regulator labeling Ether as a security fell “substantially” after it closed its Ethereum investigation in June, Sygnum noted.
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On the other hand, many crypto executives say that the US securities regulator still views Solana as a security. Sygnum concluded:
“Ultimately, for Solana to successfully challenge Ethereum in the long run, it needs to shape future technological cycles and become the birthplace of groundbreaking decentralised applications that capture the market’s imagination and drive widespread adoption.”
Sygnum — which claims to be the “world’s first digital asset bank” — holds about $4.5 billion in client assets, the firm said in a July 25 report.
The crypto bank has hubs in Zurich, Switzerland and Singapore.
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