Author: @JustDeauIt
Translation: Plain Language Blockchain
There are many misconceptions surrounding Ethereum and Solana in the timeline. It's time to dive into this noise with a data-driven approach.
This is why I created this wonderful dashboard, which compares the economics of these two networks in the following areas:
Market entry strategy
Value accumulation
Total economic value
Cost to generate $1 in revenue
Network fundamentals
Performance and valuation
It combines quantitative and qualitative analysis.
Here are some key points and the final dashboard link via @tokenterminal 👇
1. Network Costs
Now the cost of transacting on Arbitrum is about 50% cheaper than on Solana. In fact, the cost of transacting on the top L2s is even lower.
2. Turning to Total Network Fees:
Key points:
The total fees for Ethereum and the top L2s are close to $20 billion. 97.5% of the fees come from L1 (the top L2s fees are $479 million). Solana's historical total fees are $495 million, of which 87% was generated this year.
The trend is favorable for Solana, with Solana's network fees accounting for 41% of Ethereum's total fees over the past 90 days (excluding MEV). As for why we include L2, it's because they create demand for ETH and settle transactions to L1. If this economic link is broken, we will no longer consider them.
3. Protocol Revenue
Next is protocol revenue (Token burned, accruing value to non-stakers):
Key points:
64% ($ 12.4 billion) of Ethereum's historical transaction fees have been burned, accumulating value for ETH Token holders.
50% ($ 247 million) of Solana's historical transaction fees have been burned (only 2% of Ethereum's).
Currently, L2s have no value accrual mechanism for Token holders.
4. Supply-side Fees (Paid to Validators)
Key points:
Ethereum has paid $7 billion (36%) of its historical fees to supply-side validators ($ 400 million YTD).
Solana has paid $247 million (YTD $212 million).
How does Solana make up the gap? Through Token incentives/inflation. Solana has paid $3.2 billion in incentive payments YTD, while Ethereum has paid $2.3 billion.
5. Comparing Total Economic Value (Network Fees + MEV + Token Incentives)
Key points:
Over the past 90 days, Ethereum's total economic value was $1.03 billion (58% from Token incentives).
Over the same period, Solana's total economic value was $1.19 billion (79% from Token incentives).
If we focus on actual economic value (fees + MEV), Ethereum ($431 million) has surpassed Solana ($254 million) in the same period.
Over 51% of Solana's actual economic value comes from MEV (measured through Jito fees), while for Ethereum it is 29% (measured through Flashbots fees).
6. Cost to Generate $1 in Revenue
Key points:
Here, we measure the expenditure of Token incentives (cost to non-staking Token holders) to generate $1 in fees.
*Token incentives = cost to non-staking Token holders, revenue to stakers/validators.
To date, Ethereum has paid $2.65 billion in Token incentives to generate $2.06 billion in network fees ($ 1.28 spent per $1 fee generated).
Over the same period, Solana has paid $3.26 billion to generate $428 million in fees ($ 7.62 spent per $1 fee generated).
From a chain perspective, an L1 becomes profitable when its fee revenue can compensate the network's supply-side, without relying on Token incentives/inflation.
Ethereum has reached this point for most of 2023 and Q1 2024. However, with the EIP-4844 network upgrade, fees have decreased, making the network slightly inflationary (annualized at 0.4% as of Q3).
Solana has not yet achieved on-chain profitability, with a current inflation rate close to 5% (this is necessary in the early stages - Ethereum also had high inflation in its formative years).
This is a brief overview of some of the data-driven and qualitative insights that can be obtained from the dashboard on @tokenterminal.
If you want to explore and draw your own conclusions, you can access the link here: https://tokenterminal.com/terminal/studio/dashboards/11974884-5d10-4e90-91be-ffc77ddb105b
Welcome to the discussion.
Link to this article: https://www.hellobtc.com/kp/du/11/5509.html
Source: https://x.com/JustDeauIt/status/1851993593193337064
