Financial institutions that choose to launch a real-world asset tokenization platform and stablecoin on Solana could position themselves as a blockchain that could “seriously challenge” Ethereum in the long term, according to a Swiss cryptocurrency bank.
There have recently been signs that even “conservative institutions” may prefer Solana’s scalability over the stability and security benefits of Ethereum, Sygnum Bank said in an October 1 report.
“A PayPal executive recently claimed at a Solana event that ‘Ethereum is not the best solution for payments.’”
Rival payment processing company Visa recently integrated Solana for USD Coin (USDC) payments and boasted “high throughput” and “low costs,” Sygnum said.
Franklin Templeton, a multi-trillion dollar asset manager, also announced plans to launch a mutual fund on Solana. Signum said Citi is considering Solana for cross-border payments.
source: signum bank
However, Sygnum still has a large market cap between Ether (ETH) and Solana (SOL), currently worth over $218 billion, according to CoinGecko data.
Additionally, some of Solana’s trading volume metrics are overstated, Sygnum claims, and the majority of the network’s revenue is heavily influenced by memecoin issuance and trading.
Edward Snowden, a former U.S. intelligence contractor and whistleblower, recently criticized Solana for being too centralized, arguing that “anything important” built on the network could easily be disrupted if “states start moving towards it.”
Today, Ethereum still dominates the real-world asset tokenization and stablecoin markets with 81% and 49% market share, respectively, according to on-chain data. Solana has less than a 3% share in each market.
Solana is vastly superior to Ethereum… for now.
Sygnum noted in an October 1 report that Solana’s Ethereum price has risen 300% year-over-year and 600% since 2023.
Solana to Ethereum price ratio since September 2023. Source: Sygnum Bank/CoinMarketCap
But Ethereum may be poised to undergo a “sharp turnaround” after two years of significant underperformance and negative sentiment, Sygnum said.
Ethereum’s technology roadmap confuses many, but Sygnum believes that Ether is better suited for traditional investors than Bitcoin (BTC) because it is easier to value.
“Ethereum derives most of its value from economic activity on the network and the resulting revenue. (It) is more similar to stock investing, where you evaluate growth, profits and cash flow. This is more relevant to traditional investors than the concept of digital gold.”
The risk of U.S. securities regulators classifying Ether as a security has decreased “substantially” after it closed its investigation into Ethereum in June. 19, Sygnum mentioned.
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On the other hand, many cryptocurrency executives believe that U.S. securities regulators still consider Solana a security. Sygnum concluded:
“Ultimately, for Solana to successfully challenge Ethereum, it must become the birthplace of groundbreaking decentralized applications that shape future technology cycles, capture the market’s imagination, and drive widespread adoption.”
Sygnum, which bills itself as “the world’s first digital asset bank,” holds about $4.5 billion in client assets, it said in a July 25 report.
The cryptocurrency bank has two hubs in Zurich, Switzerland and Singapore.
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