Solana takes break from eating Ethereum’s lunch — for now

Finding the next big thing is the secret sauce for many investors, whether it’s startups, stocks, bonds, commodities or crypto.

Obsession with discovering “the next Ethereum” — or even an “Ethereum killer” — then seems only natural.

Ethereum’s smart contracts set the industry standard nearly a decade ago and have since inspired dozens, if not hundreds or even thousands, of rival networks.

Solana is generally considered Ethereum’s primary competitor right now. Comparing market values shows nothing has really come close to eclipsing Ethereum. Yet.

In fact, BNB Chain (BNB) and Cardano (ADA) have come the closest over the past three years.

• The market cap of BNB in April 2021 and late 2022 was about 33% of ether’s (ETH).
• ADA had up to 25% of ether’s cap during the last bull market.
• Solana (SOL) set a new record relative to ether last month with 19%.

Read more: It’s a Solanaissance: These 5 charts will cure the Ethereum vibecession

Price ratios — dividing one assets’ price by another and comparing over time — are commonly used to gauge the relative strength of cryptocurrencies.

Analyzing price alone is problematic due to inflation and deflation rates of many top cryptocurrencies.

Solana’s market cap ratio against ether has retraced by a quarter since Christmas, now about 14%

Take ATOM, the native asset for multichain ecosystem Cosmos. Over the past year, ATOM’s circulating supply has swelled by a third and its token price has slipped by 20%, according to data from The Tie.

Meanwhile, ATOM’s market cap has grown 15%. Price alone implies ATOM is struggling, when it could be the market is simply absorbing fresh supply — and then some.

Solana, on the other hand, has almost 17% more circulating supply than this time last year. Its price has quadrupled across that period, while its market cap has nearly quintupled. Comparing only SOL’s price would leave a chunk of the asset’s growth unaccounted for.

Much of Solana’s outsized growth over the past year can be attributed to its gradual recovery since the FTX debacle.

Read more: Rebuilding trust: Solana’s roadmap after a challenging year

Disgraced FTX co-founder Sam Bankman-Fried was a significant investor in Solana and its ecosystem, leading SOL to collapse by up to 65% directly following FTX’s implosion in late 2022. Ether fell less than 30% and completely recovered in about two months.

Market caps are just one metric by which to compare cryptocurrencies and blockchains. Total value locked, unique addresses, on-chain volumes, developer activity, fee revenues and transaction counts are among others. Each has its flaws.

In any case, Ethereum isn’t exactly threatened right now. But going by market cap growth alone, Solana is well on track to become Ethereum’s primary competitor over BNB.

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