Solana Surpasses Ethereum in Profitability, Exceeding $2M in Economic Value as Ethereum’s Value Declines Following EIP-4844 Launch
In a significant milestone, Solana has achieved higher profitability than the Ethereum mainchain, as reported by on-chain analyst Leon Waidmann. While Waidmann acknowledges that this comparison does not factor in Ethereum’s value as fuel and a means of payment across various Layer 2 (L2) networks, it still highlights Solana’s achievement.
A chart provided by Blockworks and shared by Waidmann showcases the total economic value derived from transaction fees and miner extractable value (MEV) for both Solana and Ethereum from February 14 to May 12, 2024.
Ethereum experienced rapid growth in economic value starting in mid-February, reaching its peak at around $40 million in late February. However, following this peak, Ethereum’s economic value gradually declined, with intermittent spikes. By April, it stabilized between $10 million and $15 million, and in the last two weeks leading up to May 12, it dropped to just under $2 million.
On the other hand, Solana had a lower peak value compared to Ethereum but showed notable highs during the same period. Starting with relatively low values in mid-February, similar to Ethereum’s early stages, Solana steadily increased its economic value through March. It aligned with Ethereum’s declining phase, stabilizing at higher values than Ethereum in April. By the end of the period, Solana surpassed Ethereum, closing at over $2 million on May 12.
Industry experts have expressed their opinions on this development. Toghrul Maharramov from Scroll ZKP noted that while Ethereum’s MEV capture did not decrease significantly, fees decreased due to the launch of EIP-4844. Austin Federa from the Solana Foundation mentioned that Ethereum’s Layer-1 (L1) activity decreased while activity on L2 networks increased.
The unexpected decline in L1 activity alongside the rise of L2s contrasts with the initial expectation that L1 would remain strong. Emmanuel Awosika, a technical writer and researcher for Ethereum R&D, emphasized that the purpose of rollup scaling was never to redirect revenue to L1. He highlighted the importance of having a valuable native token for rollups to use for data availability, settlement, and consensus.
Dan Smith from Blockworks argued that L2 activity should be measured by a different metric, considering Ethereum’s value as a gas asset on other chains. He pointed out that Ethereum likely needs to generate enough base fees to offset issuance to remain sustainable, but identifying its growth story is challenging.
This development coincides with a pre-market surge in GameStop (GME) stock, which led to a 3,914% spike in a Solana meme coin of the same name within two days. Investors turned to crypto meme coins with similar names, including the Solana-based GameStop coin, following the surprising rally of the original GameStop stock.
As of today, Solana (SOL) is priced at $143.86, with a 24-hour trading volume of approximately $2.37 billion. It has experienced a 1.60% decline in the last 24 hours and a 2.60% drop over the past seven days. With a circulating supply of 450 million SOL, Solana’s market cap stands at $64.61 billion.
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