The competition between Solana and Ethereum advocates intensifies as the Solana community rejoices over the network, surpassing Ethereum in daily revenue for the first time. On May 12, according to Blockworks Research data, Solana's total economic value, comprising transaction fees and Maximal Extractable Value (MEV), exceeded Ethereum's for the first time.
A widely circulated chart on social media illustrates Solana's achievement. The network generated nearly $2.25 million in 24-hour revenue, outstripping Ethereum's $1.98 million by almost 13%.
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Solana's Big Moment: Is Ethereum's Reign Under Threat?
The milestone garnered significant attention within the Solana community, with supporters interpreting it as a precursor to Solana eventually surpassing Ethereum in overall dominance.
Joe McCann, the founder of Asymmetric, a cryptocurrency investment firm, emphasized the significance of Solana's achievement, highlighting that Solana had exceeded Ethereum in daily economic value for the first time.
Source: @joemccann on X
McCann also pointed out the discrepancy in value between Solana (SOL) and Ethereum (ETH), noting that SOL's current value is only one-fifth that of ETH.
Ansem, a prominent trader and influencer, underscored the cost-effectiveness of transactions on Solana compared to Ethereum, noting that Solana remains significantly cheaper, with transaction costs being 100 times less. Ansem questioned why Ethereum's market capitalization remains five times higher than Solana's, considering this substantial difference in transaction costs.
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However, not everyone was swayed by Solana's milestone, particularly regarding the comparison between the two networks. Leon Waidmann, an analyst at BTC-Echo, pointed out a critical omission in the comparison: Ethereum's bustling Layer 2 ecosystem was not factored into Blockworks' data.
Waidmann argued that Ethereum's value extends beyond its mainchain, serving as a payment method and fuel for transactions on various Layer 2 networks. He cautioned against overlooking the positive impact of Layer 2 adoption on Ethereum's monetary premium.
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Solana Surpasses Ethereum's Daily Revenue, but Faces Transaction Fee Surge
Despite the enthusiasm surrounding Solana's achievement in surpassing Ethereum's daily revenue, certain crucial factors were overlooked, notably the significant increase in Solana's transaction fees. Solana, known for its high throughput, has recently processed between 2,000 and 3,000 transactions per second (TPS).
Solana Failed Non-Vote Transaction Rate | Source: Dune Analytics
However, the network has experienced congestion, leading to a notable percentage of transactions failing to execute. Data from Dune Analytics indicates that over the past month, more than 60% of Solana transactions have failed. Moreover, the number of successful transactions on the Solana network has declined by over 50% since the beginning of November.
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Solana Number of Successful Transactions | Source: Dune Analytics
To navigate this congestion, Solana users have been compelled to pay increasingly high fees to ensure the execution of their transactions. Average Solana transaction fees surged to new all-time highs, surpassing $0.018 in March and reaching a peak of $0.06 on March 18th. These soaring fees highlight Solana users' challenges amid network congestion, raising concerns about the network's scalability and usability.
Solana Average Transaction Fee | Source: Dune Analytics
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Although Solana's transaction fees have decreased to $0.0136, they remain significantly higher than those of the leading Ethereum Layer 2 solutions following the Dencun upgrade in March. According to data from GrowThePie, the average transaction fees on Arbitrum, Optimism, and Linea are currently $0.005, $0.006, and $0.012, respectively.
Source: GrowThePie
Data from The Block reveals that over 75% of Solana's transaction revenue from February through May was generated from non-vote priority fees.
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Source: The Block
Users pay additional fees to prioritize their transactions over others in a congested network, excluding votes for network validators. Non-vote priority fees help ensure faster transaction processing even during periods of heavy network traffic.
Ethereum Stays on Top Despite Solana's Recent Milestone
Despite the excitement surrounding Solana's recent revenue milestone, Ethereum continues to dominate key metrics in the web3 space. According to DeFi Llama, Ethereum leads Solana in decentralized exchange volume, holding a daily lead of 33% and a weekly lead of 26%.
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Source: Messari
Additionally, analysis from Messari highlights Ethereum's significant advantage in the "real volume" metric, which filters out wash-trading to measure genuine on-chain activity. As of May 13, Ethereum's real volume is $24.8 billion, far surpassing Solana's $6.77 billion.
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Ethereum also leads in DeFi total value locked (TVL) with $53.6 billion, compared to Solana's $4.5 billion. Furthermore, Ether's market cap is $354.8 billion, significantly larger than Solana's $111.3 billion.
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