In an unexpected twist in the world of cryptocurrency, Ethereum's decentralised applications (DApps) are witnessing a staggering increase in onchain activity. Over the past month, volumes have surged by 37.7%, reaching a breathtaking $149.9 billion, according to data gleaned from DefiLlama.
Despite this impressive surge in activity, Ether (ETH), the native currency of Ethereum, has struggled to maintain its foothold above $3,200. This leaves traders and investors alike questioning when Ethereum will regain its bullish momentum.
Ethereum: The Reigning Champ
Despite the recent setback in price stability, Ethereum maintains its dominance across several key metrics:
- Total Onchain Volume: Leaving its nearest rival BNB Chain trailing behind with volumes reaching only $26.6 billion, Ethereum boasts over five times as much activity.
- Transaction Fees: Over the last 30 days alone, Ethereum generated $163.7 million in fees — essential for maintaining network security.
- Total Value Locked (TVL): Despite Solana's impressive growth in on-chain activity at 83%, it pales in comparison to Ethereum's commanding TVL of $59.4 billion versus Solana’s meagre $8.3 billion.
The scaling efforts of Layer-2 solutions such as Arbitrum, Base and Optimism further reinforce Ethereum’s dominance by providing users with lower transaction costs while still relying on the security offered by the platform.
The Rising Phoenix: Solana
Solana is emerging as a worthy competitor to Ethereum, evidenced by its rapid growth:
- DEX Volumes: Solana has managed to overtake Ethereum with leading DApps like Raydium, Jito and Photon contributing towards an astounding $338.5 million in fees within just a month.
- Fee Revenues: Solana has accrued $133.4 million in network fees, indicating its strength in DApp activity.
However, when it comes to staking economics, Solana falls behind Ethereum. Although Solana offers a 6.2% staking reward, the inflation rate of 5.2% significantly diminishes net returns. By contrast, Ethereum's lower inflation rate of 0.7%, coupled with a 3.3% staking reward, renders it an attractive proposition for institutional investors.
The Road Ahead: Overcoming Scalability Challenges
Achieving scalability without disrupting its Layer-2 ecosystem remains the biggest challenge for Ethereum. The proposed roadmap for Ethereum 3.0 suggests reintroducing sharding and leveraging zero-knowledge Ethereum Virtual Machine (zkEVM) technology — promising substantial improvements.
The reality of this vision materialising could be years away though. While on-chain metrics suggest that Ethereum is poised for long-term growth, short-term price performance may depend on delivering scalable solutions while maintaining its competitive edge over rivals like Solana.