Is 2024 The Year Solana Flips Ethereum?
Analysts at VanEck have predicted Solana will build on its 2023 performance to flip Ethereum in 2024. Let's look at the likelihood of this prediction while comparing the two smart contract networks.
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Among the significant cryptocurrencies, Solana was the best performing in 2023, with an almost 1000% increase in value. The performance saw the token go from less than $10 when the year started to over $100 by the year-end.
Most of those gains came in the last two months of the year when DeFi activity on the Solana network recovered after falling flat due to the FTX collapse. The resurgence of Solana has reignited talks about the network flipping Ethereum. Here, we examine some of the predictions for Solana and whether it can live up to them.
2024 Predictions for Solana
Asset manager VanEck predicted that Solana will outperform ETH in 2024 with the return of DeFi. It predicted that Solana would become the top 3 blockchain in terms of market cap, total value locked, and active users and expects that there will be a frenzy over applications for spot Solana ETF in 2024.
Its analysts even made a bolder prediction, saying that Solana-based oracle platform Pyth will overtake Chainlink in total value secured (TVS). Pyth has a TVS of less than $2 billion compared to Chainlink's $15 billion. But all that could change if DeFi activity on Solana increases and its TVL soars.
Meanwhile, former ParaFi Capital CEO Santiago Santos also shared in this bullishness. During an episode of Empire podcast, he said there is a 25% chance of Solana market cap flipping Ethereum in the next market cycle. He believes more funds will flow into the crypto ecosystem during this bull run and expects Solana to get a higher percentage.
How Solana Compares to Ethereum
These predictions are unsurprising, given that Solana has been regarded as the Ethereum killer for years. When the network launched in 2020, it positioned itself as an alternative to Ethereum with cheaper and faster transactions.
However, the smart contract network had infrastructural issues and suffered further damage in 2022 due to affiliation with FTX and Sam Bankman-Fried. DeFi activity drained on Solana after FTX bankruptcy, with TVL going below $250 million.
It has since recovered in 2023, with the DeFi and NFT activity on Solana already nearing that of Ethereum by the end of the year. The same goes for the leading DEXs on both networks, and there were days in December when Solana saw more volume than Ethereum. Despite this, Ethereum remains the leading DeFi protocol, enjoying first mover advantage and wide adoption. Its TVL of $29 billion exceeds that of Solana, which is less than $1.5 billion.
Can Solana Live Up to The Predictions
It is too early to tell what will become of Solana in 2024, but it is highly unlikely that it will overtake Ethereum. Still, the network looks poised to continue its performance next year. Its 973% increase in 2023 beats out Ethereum's 98% rise; a repeat of that could bring SOL value closer to that of ETH.
Part of what has been fueling Solana's growth is the several airdrops from projects on the network. Some of the projects are expected to have their airdrop in 2024. These include Jupiter, Kamino, Drift Protocol, and MarginFi. These airdrops could boost trading activity on Solana in 2024 and further establish its DeFi ecosystem.
Additionally, the bull run is expected to continue in 2024, with several events, such as the ETF approval and Bitcoin halving, on the horizon. The bullish sentiments will benefit Bitcoin and altcoins such as Solana.
