According to crypto banking firm Sygnum, Solana is not expected to surpass Ethereum in the medium term, in part because the blockchain’s revenue remains heavily dependent on memecoins.
Solana has not yet demonstrated “convincing signs” of being able to surpass Ethereum as the preferred blockchain for institutional use, according to crypto banking group Sygnum, which cited concerns over the volatility of Solana’s revenue due to its heavy reliance on memecoins.
In a blog post published on May 8, Sygnum stated that current sentiment surrounding Ethereum “remains poor,” while market attention has shifted toward Solana’s “transaction volumes and its recent leadership in fee generation.”
However, Sygnum stated that the medium-term outlook will depend primarily on which platforms traditional financial institutions choose to deliver their product offerings, rather than on prevailing sentiment.
Sygnum further noted that they have not yet observed convincing signs indicating Solana as the preferred option, as Ethereum’s security, stability, and long-standing presence continue to hold significant value.
Sygnum argued that institutions may choose Ethereum over Solana, as the market views Solana’s revenue generation as less stable due to its heavy reliance on the memecoin sector.
The company stated that this factor will constrain potential outperformance, suggesting that the disparity in revenue sources already reflects the variation in valuation.
Sygnum identified Solana’s tokenomics as another contributing factor, describing it as “a comparable issue” to Ethereum’s criticism, where lower mainnet transaction volumes have resulted from reduced costs on its layer 2 networks.
The company stated that although Solana currently leads Ethereum in layer-1 fee generation market share, most of these fees go to validators and do not enhance the value of the Solana token.
Sygnum stated that, in terms of revenue, Ethereum still surpasses Solana by a factor of approximately 2 to 2.5 times.
Analysts argued that Solana’s tokenomics are “easier to modify” than Ethereum’s scaling strategy. However, they noted that Solana does not appear inclined to enhance token value, as the community rejected a proposal to reduce SOL’s inflation rate in March.
Solana May Advance with Emphasis on Stable Revenue Streams
Sygnum observed that Solana—often called an “Ethereum killer” with the potential to rival the network’s market share—could gain ground against the second-largest blockchain.
The company stated that Ethereum holds a dominant market share in “use cases that are demonstrating traction,” especially in areas supported by governments, regulatory bodies, and traditional financial institutions—such as tokenization, stablecoins, and decentralized finance.
However, Sygnum further noted that Solana has advanced in increasing the total value locked in its decentralized finance protocols. If Solana expands into “more stable revenue sources” such as tokenization and stablecoins, it could potentially gain additional ground on Ethereum.
Sygnum further remarked that Solana continues to receive robust support, even as the Ethereum Foundation shifts its focus toward layer 1 and acknowledges “the need to revise its go-to-market strategy.”
However, Ethereum could receive a boost in sentiment, as the blockchain’s two-year stretch of underperformance compared to Solana has temporarily ended following the foundation’s strategic shift.
