Will we enter the era of Solana dominance in the DeFi economy? Franklin Templeton compares with Ethereum

## Solana vs Ethereum

The cryptocurrency research department of the major US asset management company Franklin Templeton summarized the results of comparing evaluations of decentralized finance (DeFi) protocols built on Ethereum (ETH) and Solana (SOL) in its latest report.

The company has highlighted that Solana is gaining attention as one of the most widely used and profitable platforms, and is establishing a solid foundation in the DeFi economy. It stated that Ethereum, which has shown overwhelming presence in this area, is beginning to significantly waver in its position as a leader.

The DeFi market, which allows autonomous trading 24 hours a day, 365 days a year, has made significant progress, with a monthly trading volume reaching $611 billion (about 91 trillion yen) in January this year, and the TVL at the end of the same month exceeded $123 billion (about 18.3 trillion yen).

Ethereum has been the largest smart contract platform by market capitalization in the DeFi market, overwhelming other blockchains in metrics such as TVL (total value locked) and decentralized exchange (DEX) trading volume. However, in January, the trading volume on Solana's DEX surpassed the total trading volume of the entire Ethereum ecosystem (Ethereum, L2 chains, and other Ethereum Virtual Machine (EVM) based DEX).

Source: Franklin Templeton

Impact of Change

The report points out that the above changes are bringing about two effects on the DeFi landscape.

1. Towards the Era of SVM Dominance: DeFi may break free from the historical dominance of EVM, and the era led by Solana Virtual Machine (SVM) may be on the horizon.
2. Modularization of Ethereum: Much of the financial activity is moving to Layer 2 (L2) and Layer 1 compliant with EVM.

Solana's DeFi token is underrated

The report compared tokens of 5 major ETH projects (LDO, AAVE, ENA, MKR, UNI) and the tokens of the 5 most powerful protocols of Solana (JTO, JUP, KMNO, MNDE, RAY).

Solana-based projects saw a 2,400% year-over-year increase in fees, but a valuation multiplier of only 9x. On the other hand, for Ethereum-based projects, the fee increase was 150%, but the valuation multiplier was 18x.

From this comparison, Franklin Templeton pointed out that tokens on the Solana platform are significantly undervalued.

The valuation multiple of SolanaDeFi is significantly lower on average than equivalent tokens of Ethereum, despite its notably high growth profile, highlighting a clear asymmetry in valuation.

Reasons for the low rating and future prospects

One of the reasons why the evaluation of Solana DeFi tokens is lower compared to Ethereum is the concern about the stability and security of the underlying Solana ecosystem.

However, for a year until February 6, 2025, Solana has been operating stably without any downtime, and considering upcoming upgrades such as Firedancer, concerns about the Solana ecosystem may be alleviated, the report summarized.

As Solana continues to demonstrate resilience as a decentralized computing platform, the market may soon assign a price to the Solana DeFi protocol, which is equivalent to the Ethereum protocol, as it is becoming a solid foundation.

Analysts at Bitwise Europe seem to believe that explosive app development and adoption, like the so-called 'iPhone Moment,' will also occur on Solana.

Solana blockchain is expected to surpass Ethereum in 2025, and the price of SOL is expected to increase by 3,000% by 2030.

News and Price of Solana (SOL)

! sol icon

Recommended Exchange | Future Potential, Buying Methods, and Risks Overview

a.t3-set { text-decoration: none !important; }

Evaluation of Ethereum

Franklin Templeton, who highly appreciates Solana, does not have a pessimistic view of Ethereum.

The transition of DeFi activities from Ethereum's mainnet to L2 demonstrates that Ethereum's scaling strategy is on track.