Solana broke new ground as it outperformed ETH in total transaction fees and MEV tips on a weekly index. This is a significant milestone for Solana, often referred to as the “Ethereum killer.” Apart from that SOL also surpassed ETH and all its Layer-2 solutions in fee revenue, indicating strong network activity and adoption. However, a debate arose over including L2 fees in the comparison.
I’m not convinced L2 activity should be counted in this, but maybe another metric. ETH derives value from being in demand as a gas asset on other chains, and I think that’s a justified value accrual path. However, I don’t see that as 1:1 comparable to another asset that both derives value as a gas asset AND has the activity occurring on its chain I’d also say that Ethereum probably just needs to generate enough base fees to offset issuance to be fine.
A section of the community argues that L2 activity are beneficial to the Ethereum ecosystem by increasing demand for ETH as a gas asset. Others believe that direct on-chain activity is more valuable and should be given more weightage. Having said that, the recent surge in SOL’s transaction fees is primarily attributed to the rising popularity of meme coin trading platforms on the network. This increased activity has led to higher demand for Solana’s blockchain, resulting in increased fees for validators and stakers.
Community members also took note of the direct correlation between network activity and fee generation highlighting Solana’s efficiency in capturing value. While there were counterarguments regarding L2s such as excluding L2 fees might not truly reflect Ethereum’s overall value capture, ultimately, the debate boils down to key aspects of value measurement.
Solana Vs Ethereum: The Ultimate Value Proposition
The first issue is on-chain activity vs. off-chain activity. Here the question lies in whether the focus should be on direct transactions on the base layer, or the entire ecosystem. Next, is the flow of value between the base layer and L2s. Does Ethereum truly capture enough value from L2 activity to compensate for the loss of L1 activity? Those questions remain to be answered.
Overall, Solana’s recent performance is a significant development in the blockchain space. It challenges Ethereum’s dominance and raises questions about the future of Layer-1 blockchains. Amidst the ongoing debate of L2s, Solana’s performance is undeniably impressive and has captured the attention of the crypto community.