The Solana blockchain ecosystem has had quite a good run over the past year, with memecoin activity taking the centre stage. What’s even more interesting to observe is that this DeFi chain is finally living up to the 2021 bull run hype when it was touted as the ultimate Ethereum challenger.
Solana’s total value locked (TVL) has grown from a mere $1.4 billion at the beginning of 2024 to a whopping $9.3 billion as of writing. While this figure is still a fraction of Ethereum’s current $58 billion TVL, the latest on-chain metrics tell a different story. According to a recent report by OKX, Solana dominated close to half of the DEX volume in January 2025, “drinking the Ethereum milkshake”.
The latest data from Messari also tells a similar story; Ethereum’s daily active addresses currently range between 343,271 to 557,176 while Solana records 3,309,111 to 6,471,803. The transaction fee on Solana is also three times that of Ethereum, but what particularly stands out is the transaction count; for instance, on February 6th, Solana facilitated 63 million transactions while Ethereum only recorded 1.3 million transactions.
Going by these numbers, it is obvious that Solana is already outperforming Ethereum on several fronts. What factors are behind this surge? The next section of this article will highlight four main drivers of Solana’s ecosystem growth.
Memecoin Playground
Solana’s memecoin ecosystem has been the talk of the crypto town hall for a while now; as per Coingecko metrics, it is now worth $11 billion in market capitalization. This crypto sector is one of the niches that has made Solana to acquire a good chunk of Ethereum’s market base as well as newer entrants into the DeFi ecosystem. For context, close to 50% of those who purchased the $TRUMP memecoin on its weekend debut have never interacted with DeFi before.
This allure within and beyond the crypto community is one of the main factors that is setting up Solana as a serious contender against Ethereum. It is also interesting to observe that Solana has made it seamless for anyone to launch memecoins through its Pump.fun feature; while it has come under criticism in the recent past, this feature is what has made Solana’s memecoin ecosystem a beehive of activities.
Attracting Bitcoin’s Liquidity
Bitcoin is no secret the most liquid digital asset, it currently accounts for 52.98% market dominance out of the $3.2 trillion total crypto market cap. This idle liquidity which has long been sitting in the owners’ cold or hot wallets is gradually finding its way into the Solana DeFi ecosystem through novel solutions such as the Zeus Network, a pioneer permissionless communication layer designed to connect Bitcoin with Solana.
This network is powered by the ZeusNode whose core function is to act as an interaction establisher, providing a permissionless avenue for Solana to connect with other blockchains. As such, Bitcoin holders can deposit their BTC into the Solana DeFi ecosystem to chase more yields rather than sitting on idle digital assets. Zeus Network’s first DApp, APOLLO, is specifically designed for this purpose, bringing the first on-chain Bitcoin exchange built on Solana. With this dApp, Zeus is also introducing zBTC, the first fully permissionless Bitcoin asset on Solana, allowing users to participate in new DeFi strategies on Solana, including trading, providing liquidity, and vault strategies for yield optimization.
While Ethereum’s DeFi ecosystem also enjoys a good amount of liquidity from Bitcoin through WBTC, Solana’s expansion to compete for Bitcoin liquidity could play a role in changing the overall dynamics. This is partly because of the idle amount of BTC sitting in wallets and the ease of using the assets on Solana compared to Ethereum.
Speed and Transaction Cost
When it comes to efficiency, Solana has indeed lived up to its reputation. This blockchain network leverages a hybrid Proof of History (PoH) and Proof of Stake (PoS) consensus mechanism which has seen it process up to 800 transactions per second (tps). On the other hand, Ethereum is still at an average of 12 to 15 tps even after the shift from a Proof-of-Work (PoW) consensus mechanism to the current PoS architecture.
It is also goes without saying that Solana is far more cheaper than Ethereum, this is in fact one of the main reasons why retail is flocking on the chain. To provide some more context, the average cost of sending $50 through the Ethereum blockchain at the moment is around $0.56 while on Solana, a similar transaction would cost approximately $0.000005 SOL, this is less than a cent at the prevailing market prices.
Strength of the Community
Last but not least, Solana’s community has grown significantly and has more morale than Ethereum’s. This can be attributed to the difference in opportunities within both DeFi ecosystems and the price action of their native tokens. On one hand, Solana’s community has scaled beyond the crypto boundaries to attract even the POTUS whose affiliates launched the $TRUMP coin on Solana a few days before the inauguration.
Meanwhile, Ethereum has been struggling with morale, which has further been affected by ETH price action compared to other digital assets. The price of SOL has more than doubled with the last year while ETH has mostly been range bound. This disparity has had an effect, especially on Ethereum’s die-hards, some of whom are beginning to question whether the chain will manage to maintain its lead role in DeFi.
Conclusion
The next era of DeFi adoption is already happening, and in this new phase, the odds seem to be in favour of Solana. This is because of the factors highlighted in this article as well as other less significant ecosystem drivers currently at play. It will be interesting to witness the flippenning or whether Ethereum makes a comeback to its unrivaled DeFi position. Only time will tell, but Solana is definitely on the path to disrupting Ethereum’s long-standing DeFi dominance.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
