Solana Fierce Rally in 2023: Is Ethereum’s Dominance Under Threat?

Layer-1 blockchain Solana’s sporadic and unexpected rise this year has been marked with excitement from holders and speculations for a wider market takeover.

The token now sits comfortably above the $100 threshold after rising all through the year. Dubbed the Ethereum-killer, Solana first gained prominence in 2021 when its enthusiasts asserted the blockchain’s speed and low fees would push it to flip Ethereum.

Given its rise this year, a feat that far outpaces that of Ethereum, the conversations are back in the fore. Compared to Solana’s 945% rise, Ethereum grew around 98% this year, which, although significant, is a more muted price movement.

However, the brewing competition from Solana extends beyond the price movements. Recent reports note that the layer-1 blockchain has flipped to Ethereum as the alternative cryptocurrency of choice in other trading aspects.

This month, Solana temporarily surpassed Ethereum in Open Interest (OI) rates. Likewise, the token crossed Ethereum on decentralized exchange (DEX) 24-hour trade volume. While Ethereum has since regained the top market share in these metrics, Solana’s brief takeovers suggest shifting dynamics in investors’ preferences.

Despite the recent upward trend, Ethereum remains the clear layer-1 blockchain in terms of market size. According to data from CoinMarketCap, the digital asset has a market capitalization of $285 billion, which far outstrips Solana’s $45 billion.

In terms of total value locked (TVL) on blockchains, Ethereum continues to maintain a strong lead. Data from DefiLlama shows Ethereum has over $29 billion in TVL. On the other hand, Solana has a $1.387 billion TVL, considerably lower than Ethereum’s.

While Ethereum’s dominance is glaring, Solana’s cheapness and speed continue to make it a threat. Moreover, given Solana’s rise from under $10 at the start of the year to over $100, the digital asset’s community members maintain their unwavering belief that the network could someday only be second to Bitcoin.

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