Will Solana Beat Ethereum in the Race to 100m Users?

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Solana has overcome several challenges to push the boundaries of what is possible on a blockchain, creating the opportunity to host a killer app that is the first to reach 100 million users.

The Solana blockchain has faced several challenges in recent years, including network halts, the crypto winter, and the collapse of the FTX exchange, which invested heavily in the SOL cryptocurrency and projects on the blockchain.

But Solana is emerging from the negative sentiment. It has achieved 100% uptime year-to-date, having made significant improvements to increase its resilience. The total value locked (TVL) on the blockchain, which indicates the use of the platform for decentralized finance (DeFi) applications, has almost doubled from the start of 2023 in both SOL and US dollar values, from $210 million to $415 million, according to data compiled by DeFi Llama.

As the blockchain industry moves on from the FTX/Alameda saga and looks ahead to the next Bitcoin halving in 2024, what is Solana’s future potential?

The FTX Impact

FTX co-founder Samuel Bankman Fried was a vocal supporter of Solana, and the exchange, along with hedge find Alameda Research, bought large volumes of SOL from blockchain developer Solana Labs and the Solana Foundation, the nonprofit organization that supports its development. Bankman Fried also launched Serum, a decentralized exchange (DEX) on Solana, and invested in several projects built on the network.

SOL was FTX’s largest crypto holding, with over 71.8 million SOL, worth approximately $1.16 billion, locked and held. This represents around 17% of SOL’s circulating supply and around 13% of its total supply.

The locked staked portion of 52 million SOL is vested until 2027, with a 7.5 million unlock of one of FTX’s accounts in 2025. However, FTX liquidators have the right to completely liquidate all the holdings.


The exact value of SOL that could hit the market is unclear. Galaxy Digital is facilitating the sale of FTX and Alameda’s holdings with a weekly limit of $100 million worth of coins, although when this will happen remains to be seen. Galaxy Digital could sell as much of the holdings on the over-the-counter (OTC) market as possible and choose to sell it in batches to limit the market impact.

Following the downfall of FTX, Alameda, and Bankman Fried, popular projects built on the Solana blockchain, such as y00ts and DeGods, opted to migrate to the Polygon and Ethereum blockchains.

However, developers are returning to Solana, especially with the upcoming launch of the Firedancer validator client, which can potentially make the nodes that process transactions on the blockchain faster and cheaper.

Why is Firedancer a Potential Game Changer for Solana?

Firedancer is a next-generation independent validator client for Solana that Web3 infrastructure developer Jump Crypto is designing to provide an alternative to Solana Labs’ current and only client and increase network performance and scalability.

To reach its goal of processing 1 million transactions per second (tps), the Solana network would need to scale load balancing. Firedancer leverages hardware- and software-based upgrades to achieve this. In a live demo in November 2022, a single validator running Firedancer processed 1.2 million tps. The client’s production release has yet to be announced, but early demonstrations indicate that it will introduce redundancy and performance improvements to Solana’s network, according to blockchain developer platform Alchemy.

As well as providing performance improvements, Firedancer may reduce operating costs for Solana nodes, as it is designed to be more efficient.

The SOL price soared by 77% in October 2023, coinciding with the testnet launch of Firedancer.

Firedancer contributes to developers’ increased interest in the Solana Virtual Machine (SVM), the execution software that processes transactions and smart contracts on the blockchain, according to research by on-chain analytics developer Nansen.

Nansen analyst Sandra Leow said:

“Firedancer is arguably one of the most exciting upgrades for Solana. It will likely promote significant optimizations to the validator client and should function much more effectively than the current Solana Labs client.


As of now, the crypto narrative is primarily 97% Ethereum Virtual Machine (EVM) and 3% SVM. If the SVM continues to take a cut of EVM’s market share, the Firedancer upgrade and improved hardware/bandwidth efficiencies could help expedite the adoption of SVM.”

Can Solana Reach the 100m App User Milestone?

Solana’s reputation will continue to strengthen if more enterprise and institutional players adopt SVM and opt to use the network. Some companies have made the move: in September 2023, Visa said it would introduce Solana as a settlement layer to boost its cross-border USDC stablecoin payments, following global e-commerce platform Shopify’s announcement that it has integrated the Solana Pay system in partnership with Mastercard.

Solana’s key value proposition is its cost-effectiveness and speed compared with the rest of the market, currently processing around 3,000 tps, 30 times the tps of Ethereum and Layer 2 protocols, Leow notes.

While there are more than 1,000 blockchains in operation, their combined user base remains small relative to off-chain commerce. “This is because blockchains are clunky to use, and there is little to do on the chain besides exchange value and speculation,” argue analysts at investment firm VanEck.

“For crypto to achieve widespread adoption and grow its $1.3T market cap, it needs to have a so-what for people and businesses who are not decentralization maxis or libertarian zealots. It needs a killer application. And the chain that hosts that killer application stands to benefit immensely from the activity generated by that app.”

VanEck’s analysts have modeled a scenario in which Solana is the first blockchain to host a single application that onboards over 100 million users.

Most market observers may assume this milestone would be reached by Ethereum, the blockchain of choice for most smart contract developers. But VanEck argues that Solana’s approach to blockchain scaling, blending radical experimentation with applied science, pushing to the limits of technological feasibility problems rather than trying to circumvent them, makes the network more capable in its processing capabilities.

“The probability of a blockchain network hosting the next “killer apps” hinges upon that chain’s ability to make using that application fast, convenient, and accessible. The more capable the blockchain, the better the environment for a user,” VanEck states.

Solana has initiated a variety of experiments, including DeFi applications, blockchain-optimized mobile phones, executable non-fungible tokens (XNFTs) that contain applications, and consumer-focused products such as decentralized mapping and automobile data collection. “More so than any other ecosystem, people building projects in Solana are creating things that may provide a tangible impact on everyday life.” This is the key to creating a “killer app” that achieves widespread adoption.

Other emerging Solana DeFi applications include:

  • Phoenix, a decentralized limit order book that supports permissionless spot asset markets. Phoenix is built by Ellipsis Labs, which recently closed a $3.3 million financing round led by Electric Capital. All market actions, such as the placement, cancellation, and filling of limit orders, are written on-chain, so making it easy for traders to query the full live and historical state of markets.
  • Drift Protocol is a derivatives exchange on Solana with over $1 billion in cumulative volume and strong recent growth, including a 50% increase in TVL in one month. Drift has introduced CONNECT, which allows users of Metamask wallets to bridge from Ethereum Virtual Machine (EVM) chains to Solana.
  • Squads Protocol is a new multi-sig platform on Solana that has secured $600 million in assets and $950 million in total transaction volume.
  • Kamino Finance is an automated liquidity protocol that allows users to earn yield on their assets by providing liquidity to concentrated liquidity market makers (CLMMs). It facilitated over $1 billion in trading volume in the third quarter of 2023.

Why Would Solana Overtake Ethereum in App Users?

While blockchain capacity is often assessed based on tps, data throughput indicates the amount of data a blockchain can receive and translate into ledger updates over a given time period. The higher the data throughput, the better.

“As it stands, Solana’s data throughput exceeds that of any other blockchain in existence. In fact, Solana’s data capacity exceeds that of most planned blockchains, and… the Firedancer upgrade promises to exceed Solana’s current capacity by a factor of 10. While we do not pretend to know how much data the next killer application’s blockchain needs to ingest and process, we imagine that 100M+ users doing anything on-chain will push blockchain scalability to its limits,” VanEck’s analysts state.

A chart of data throughput
Source: Frictionless Capital

This is significant because Solana translates its data throughput capability into solving problems that users care about, the analysts argue. Solana enables faster responses to the user than most other blockchains – including Ethereum – because it offers continuous transaction processing.

The Ethereum blockchain pools incoming transactions in a mempool, which essentially acts as a waiting area. Ethereum validator nodes select transactions from the mempool based on the price offered for the transaction. Transactions are executed every 12 seconds, and the block containing the transactions is added to the chain.

This is a substantially slower method than Solana’s transaction processing, leading to longer wait times for transaction settlement. Solana begins processing transactions instantly and completes the turnaround in approximately 2 seconds.

Solana has also created a Local Fee Markets feature to improve the user experience. These act as sub-pipelines that allow information to flow from different users to multiple parts of the ledger simultaneously. This addresses one of the critical limitations of Ethereum and other blockchains, which is that a rise in traffic from one application, such as minting an NFT, slows down the network for all other applications.

A killer app will require users to be able to consistently interact with the blockchain. Local Fee Markets allow Solana to charge different prices based on demand, allowing many applications to retain network access when one application is experiencing heavy usage. This is particularly important because the functionality of a killer app could depend on its ability to interact simultaneously with many different apps, VanEck notes.

Liquid Staking has overtaken lending as one of the most essential activities in DeFi. Almost $20.22 billion worth of ETH is staked in liquid staking protocols such as Lido and RocketPool, representing about 40% of the total ETH staked.

However, only around 3-4% of staked SOL sits in Solana’s liquid staking protocols, creating an opportunity for Solana to tap into its liquid staking landscape to increase capital efficiency for its tokens and increase its total TVL and ecosystem.

Based on the liquid staking yield on Lido across both chains, as well as historical average volatility, maximum drawdown, and risk-reward ratios, Solana’s staking yield is almost double Ethereum’s for close risk profiles, according to VanEck.

Solana’s Limitations vs Ethereum

However, despite its potential, Solana is less likely than Ethereum to host the majority of global crypto transactions by 2030. While the Solana blockchain enables higher throughput, it lacks adoption momentum by most cryptocurrency users and developers.

Solana currently retains a substantially lower share of total crypto TVL at around $400 million out of $46 billion and a similarly small percentage of daily active users, with around 184,000 out of 5.5 million. The Ethereum ecosystem will likely remain the platform of choice for blockchain developers.

Solana also faces a challenge in attracting developers to its ecosystem because of the complexities of creating applications on the blockchain and using SVM. Solana uses the Rust development language, which has 2.2 million active developers, compared to Ethereum (ETH), which uses JavaScript with 17.4 million developers.

This has resulted in Solana accounting for only 6-7% of weekly active crypto developers over the past 18 months.

“While this consistent share is remarkable given that Solana lost one of its biggest backers in FTX/Alameda in November 2022, it needs to increase its total developer count as well as its market share of developers to increase the probability of hosting tomorrow’s blockbuster application,” according to VanEck. The more developers working on a blockchain, the more likely one of them will build an application that brings the next 100 million users.

VanEck’s $11,800 price target for ETH was based on the Ethereum blockchain, achieving a 70% market share of the value transmitted across open-source blockchains. Its base case sees Solana adoption approaching 30%.

VanEck’s analysis assumes that SOL monetizes at only 20% of ETH’s take rate and achieves less than half of its market share because of a fundamental difference in community philosophy. Modelling such as “credible path” to $8 billion in revenues for SOL token holders by 2030 and a bull case of $51.8 billion. Its valuation scenarios project a SOL price ranging from a bearish $9.81 to a bullish $3,211.28 if Solana could avoid Ethereum’s event horizon and reach Ethereum-like dominance.

The Bottom Line

Solana has overcome several challenges to push the boundaries of what is possible on a blockchain, creating the opportunity to host a killer app that is the first to reach 100 million users. In contrast to Ethereum’s approach of specializing in modular blockchain components, Solana is taking an integrated approach to maximizing data throughput, although it is doing so from a position of relative weakness with fewer developers, TVL, and investment capital than Ethereum and EVM-compatible chains.

The ecosystem also faces potential challenges like the uncertainty around FTX/Alameda’s SOL holdings. And any further major network halts in the future would damage Solana’s reputation and confidence in its recent upgrades.

Still, Solana’s growing TVL, leading DeFi apps, and stable monthly transaction figures indicate the chain’s potential to be a hub of financial activity. Analyst modeling predicts an upside in the base case for the SOL token that could justify a place for SOL in crypto investor portfolios.

As with any emerging blockchain technology, the path forward for Solana is uncertain but shows promise.


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Nicole Willing
Technology Journalist
Nicole Willing
Technology Journalist

Nicole is a professional journalist with 20 years of experience in writing and editing. Her expertise spans both the tech and financial industries. She has developed expertise in covering commodity, equity, and cryptocurrency markets, as well as the latest trends across the technology sector, from semiconductors to electric vehicles. She holds a degree in Journalism from City University, London. Having embraced the digital nomad lifestyle, she can usually be found on the beach brushing sand out of her keyboard in between snorkeling trips.