Solana has emerged as a major competitor to Ethereum in several metrics such as users, fees, and trading volume. However, one area in which SOL is lagging behind Ethereum is Bitcoin adoption. Market analyst 21.0 discovered a huge discrepancy. SOL blockchain has a mere $86 million BTC compared to a whopping $10 billion worth of BTC on Ethereum.
The huge discrepancy is puzzling given Solana’s low fees and relative scalability that make it well-suited for Bitcoin use cases. Moreover, 21.0 uncovered that over $1 billion worth of BTC was on SOL in late 2021 But most of that BTC was concentrated in the flawed soBTC token issued by the now-bankrupt FTX, which wasn’t fully collateralized and not redeemable after the exchange’s collapse.
The FTX collapse represented a pivotal moment in Solana’s history, their TVL dropped from $10B to $200M (-98%) The community doubled down on Sol even many called for its demise. They rebuilt the ecosystem from the ground up, and Sol’s TVL has grown back to $4.8B (21X)
“Despite the Revitalised DeFi ecosystem, Bitcoin is still underutilized on Solana The only options for the SOL ecosystem after the collapse of FTX, are WBTC from Wormhole, and tBTC from Threshold Network,” said 21.0 analyst Mary Zhu. “However, both are bridged solutions that use a lock-and-mint approach.”
Although bridged solutions are convenient, they have been susceptible to hacks and exploits. As per data shared by analyst firm Elliptic, roughly $3 billion has been lost due to hacks since 2021. Despite the complementary nature between the two chains, the actual adoption of BTC on Solana falls short.
Solana and Bitcoin: The Gap
“As complimentary as Solana and Bitcoin are, the actual BTC adoption has been underwhelming so far due to these shortcomings,” said Zhu. “To realize its full potential, SOL needs an easy, secure, and native way to transact Bitcoin that is suitable for both retail and institutional users.”
Several projects are currently working on solutions to bring Bitcoin natively to Solana in a trustless manner. If successful, it could unlock tremendous growth for the SOL ecosystem and potentially position it as the go-to platform for Bitcoin-based decentralized finance.
