Solana and Ethereum have continued in their value transfer moves amid broader shift in market dynamics.
The 42% of value that left Ethereum (ETH) to Solana (SOL) has suddenly rerouted its way back to the former. Generally, Solana SOL $150.7 24h volatility: 2.6% Market cap: $78.04 B Vol. 24h: $3.80 B has garnered inflows from several blockchains in this past year. According to the founder of The DeFi Report, Michael Nadeau, a larger percentage of these flows went to Ethereum ETH $1 845 24h volatility: 2.6% Market cap: $222.72 B Vol. 24h: $14.22 B . Solana recorded $2.36 billion in inflows from Ethereum in its Year-to-date (YTD) chart.
However, more than $1 billion flowed back to Ethereum, representing 42% of the total.
Solana Loses Mln in TVL to Base, Optimism and Arbitrum
He also acknowledged the need for Solana to pull Total Value Locked (TVL) from Ethereum and Layer-2 networks. “[…] But the only thing that really matters for Solana is pulling TVL from Ethereum (and the L2s). Why? That’s where all the value sits today. Is it happening? Not really,” Nadeau wrote in an X post on Wednesday.
No. Adding some context (and data) changes the story regarding flows to Solana from other chains👇
Over the last month, @base is #1 in terms of net flows ($463m). @solana is #2 with $197m of net flows. @SuiNetwork #3 with $120m.
If we zoom out to Year-to-Date, @arbitrum… https://t.co/FXd7kqJ2YD pic.twitter.com/mqqfRnGxpc
— Michael Nadeau | The DeFi Report (@JustDeauIt) October 30, 2024
For more context, the DeFi Report founder cited data from crypto data platform Artemi. Nadeau pointed out that Solana lost about $55 million in TVL to Base, Optimism, and Arbitrum YTD. Also, the flow to Solana from Ethereum YTD was described as “modest”. It accounted for only 2.7% of Solana’s TVL. Currently, DeFiLlama data says Ethereum’s TVL is approximately $50 billion.
Ethereum saw around $6 billion in net outflows YTD, but 83% of this value reached L2 chains within the ecosystem. Consequently, Nadeau thinks these assets will continuously drive value to Layer 1. He based his forecast on the fact that most of the value has not entirely left the chain but is being used within its ecosystem.
When Solana flipped Ethereum in daily transaction fees on October 28, it generated over $2.54 million in revenue within 24 hours. This was reasonably higher than Ethereum’s $2.07 million. As a result of this outlook, Solana ranked as the fifth-largest fee-generating protocol. Much of the surge in Solana’s daily fees was attributed to increased activity on decentralized exchange Raydium.
Only Raydium generated $3.41 million in fees on the Solana blockchain that day. Similarly, memecoin launchpad Pump.Fun has contributed approximately $29.5 million to Solana’s $61.7 million fees over the past month.
How Feasible Is a Solana ETF?
In July, VanEck and 21Shares filed to list spot Solana ETF with the United States Securities and Exchange Commission (SEC). The Chicago Board Options Exchange (CBOE) urged the SEC to approve the Solana ETFs in their two distinct filings. Rob Marrocco, global head of ETP listings at Cboe Global Markets, described SOL as “the third most actively traded cryptocurrency after Bitcoin and Ether.”
Shortly after, both filings were pulled down from CBOE’s website, sparking rumors of a denial or the firms reconsidering their applications. Even Nate Geraci, the President of the ETF Store, took to X to suggest that the removal confirms SEC Chair Gary Gensler’s unwillingness to approve a Solana ETF during his tenure.
Recently, Canary Capital filed for a spot Solana ETF with the US SEC. The offering aims to track SOL’s price via the Chicago Mercantile Exchange CF Solana index, a real-time price benchmark per the investment firm’s S-1 registration statement.
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