Originally published on: November 29, 2024
The Ethereum network has faced criticism for its high transaction fees, often exceeding $4. However, the rise of layer-2 blockchains has provided a solution for decentralized applications (DApps) seeking scalability. In the past 30 days, this ecosystem has seen a 70% increase in volumes, raising the question of whether it can surpass Solana’s success.
Solana has surpassed Ethereum in base layer activity but falls short when compared to Ethereum’s layer-2 blockchains. According to DefiLlama data, Ethereum and its layer-2 ecosystem accounted for 45.2% of the decentralized exchange (DEX) market share in November, while Solana captured 35.4%.
Ethereum’s advantage lies in its base layer, boasting $69.7 billion in total value locked (TVL) compared to Solana’s $9.2 billion. Notably, Ethereum’s layer-2 solutions like Base and Arbitrum each hold $3 billion in TVL. Overall, the Ethereum layer-2 ecosystem has reached a TVL of $11.4 billion.
While Solana has gained traction, Ethereum’s dominance remains unchallenged. The growth of Base, an Ethereum layer-2 solution supported by Coinbase, shows promise, especially in the memecoin sector.
Memecoins have fueled Solana’s growth, with tokens exceeding $1 billion in market capitalization. Platforms like Raydium and Orca have seen significant trading activity, accumulating $24.6 billion in volumes over the past week.
Analysts emphasize the importance of capturing fees for a network’s survival. Solana recently became the highest-grossing blockchain in fees, sparking discussions about the valuation of Ethereum. Looking forward, Ethereum plans to adjust fee structures to enhance DApp efficiency and reduce costs.
While Ethereum’s layer-2 solutions currently lag behind Solana in user experience, Base is gaining momentum thanks to Coinbase’s influence. Solana’s continued growth is expected to impact TVL, volumes, and SOL’s price momentum positively.
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