Author: Adrian Zmudzinski
Translated by: Tim, PANews
According to a recent report by Standard Chartered, Layer1 blockchain Solana may be evolving into a "one-trick pony" platform primarily focused on generating and trading meme coins.
Based on the research report dated May 27, Solana dominates the public chain sector with high transaction volume and low transaction costs, thanks to its design architecture of fast and low-cost transaction confirmation. This technical advantage has brought an unexpected consequence: so far, it has mainly concentrated on meme coin trading, which occupies most of the activity on Solana (measured by "GDP", or application revenue).
Standard Chartered stated that the meme coin craze has put pressure on Solana's scalability, but the volatility and speculative nature of such assets also bring drawbacks. As meme coin trading volume declines, the bank warns that Solana may struggle to maintain its momentum.
Meme Frenzy Past Its Peak
The report noted that the meme coin frenzy based on Solana has passed its peak, and the decline in usage combined with "cheap" trading is not an ideal combination. The bank suggests that Solana should expand into other areas requiring massive low-cost, fast transaction processing, such as financial settlement, decentralized cloud computing, or real-time data exchange, which are highly compatible with its blockchain's high throughput characteristics.
Solana decentralized exchange trading volume. Source: Standard Chartered
According to the report, these areas may include high-throughput financial applications and traditional consumer applications like social media. However, the bank points out that scaling such applications may take years, which could have serious consequences for Solana. If progress is not as expected, its market competitiveness, developer ecosystem, and platform reputation could be severely damaged, with potential significant valuation pullback.
"Therefore, we anticipate that Solana's performance will lag behind Ethereum in the next two to three years before catching up, at least in terms of actual value."
Standard Chartered's cryptocurrency target prices. Source: Standard Chartered
Solana's Advantages Gradually Disappearing
Solana has long positioned itself as a fast, low-cost L1 public chain supporting smart contracts, directly competing with Ethereum. However, this advantage may be gradually weakening.
Average transaction fees for Solana and Arbitrum. Source: Standard Chartered
Since the Dencun network upgrade in March 2024, Ethereum's Layer 2 platforms have surpassed Solana in average transaction costs. This shift puts pressure on Solana's value proposition as the "cheapest high-throughput blockchain". Standard Chartered noted that Ethereum, through a modular design, layers data availability, execution, and consensus, achieving more efficient expansion while maintaining decentralization: "The modular approach allows Ethereum to scale transaction processing at low costs (after the Dencun upgrade) while maintaining the mainnet security advantages of high decentralization."
