Bitrabo Editorial
A bullish case has been presented by analysts at Pantera Capital, a crypto-focused asset manager, favoring the Solana ecosystem over Ethereum. They have pointed out the rapid growth of Solana and the reasons why it is anticipated to capture a significant portion of the market from Ethereum.
Factors Leading to Solana’s Market Share Growth
In a recent blockchain letter, analysts Franklin Bi, Cosmo Jiang, and Eric Wallach from Pantera Capital emphasized Solana’s “monolithic architecture” as a key factor that could enable it to take market share from Ethereum in terms of blockchain developer activity. They stressed that developers play a crucial role in the success of a blockchain and expressed their belief that Solana is emerging as a strong competitor for the future of blockchain development.
The Pantera analysts drew parallels between Solana’s monolithic architecture and Apple’s integrated hardware and software approach in macOS. They argue that Solana’s network design offers various advantages such as a seamless user experience, accelerated innovation, and improved security.
Moreover, they highlighted how Solana’s architectural strengths facilitate the implementation of diverse use cases and user experiences that might be more challenging to execute on modular blockchains like Ethereum and Cosmos. Specifically, Solana’s capabilities are deemed valuable for applications like content distribution, decentralized physical infrastructure networks (DePINs), and central limit order books (CLOBs).
Bi, Jiang, and Wallach also cited examples of applications leveraging Solana’s monolithic architecture to deliver compelling functionalities. They referenced the NFT platform DRiP, which they attributed much of its success to Solana’s capabilities, enabling the distribution of millions of NFTs to collectors globally at minimal transaction costs.
Additionally, they mentioned Hivemapper and Phoenix as other applications benefiting from Solana’s architecture. Notably, asset manager Franklin Templeton had previously recognized Solana’s advanced technology and highlighted its suitability for sectors and applications that are expected to drive the next phase of crypto adoption.
Fundamental Growth of Solana Supporting the Positive Outlook
Pantera noted that the positive outlook for Solana is being validated by key fundamentals such as user growth and transaction fees experiencing significant growth. The firm highlighted how Solana has become a preferred platform for retail investors and traders of meme coins. Solana has also reportedly displaced Ethereum’s dominance in the NFT market from the previous cycle.
The rapidly expanding user base of Solana is evident in the increasing number of unique active addresses, which have surged from 14,000 in October 2020 and a low of 202,000 in October 2023 to nearly 1.34 million. Pantera also pointed out Solana’s priority fees, which have surged from below $100,000 per month in mid-2023 to an all-time high of over $60 million in March 2024, highlighting the strong demand for Solana.
Furthermore, the rising volume on Solana’s decentralized exchanges (DEXs) and the record-breaking number of token launches underscore key fundamentals suggesting that Solana is well-positioned to maintain its growth trajectory and capture a significant portion of the market.