Sygnum, a prominent crypto bank group, has cast doubt on Solana’s ability to overtake Ethereum as the preferred blockchain for institutional adoption. In a blog post dated May 8, the company highlighted Solana’s unstable revenue structure and heavy reliance on memecoin transactions as key factors limiting its growth potential in the eyes of traditional financial institutions.
Ethereum’s Edge in Institutional Appeal
Despite Ethereum’s current market sentiment being described as “poor,” Sygnum noted that its security, stability, and proven track record continue to make it the blockchain of choice for institutional platforms. While Solana has gained significant traction in fee generation and transaction volume, Sygnum argued that Ethereum’s dominance in critical sectors like tokenization, stablecoins, and decentralized finance (DeFi) remains unchallenged.
Solana’s Path to Institutional Relevance
Sygnum acknowledged that Solana, often dubbed as an “Ethereum killer,” has made strides in the DeFi space with increased value locked on its protocols. However, the company emphasized that Solana’s reliance on memecoins for revenue generation poses a risk to long-term stability. To rival Ethereum, Sygnum suggested that Solana must focus on establishing more stable revenue streams, such as tokenization and stablecoins, to attract institutional adoption.
Despite recent setbacks, Sygnum believes Solana still holds significant potential, particularly if it can pivot to a more stable revenue model. The firm also noted that Ethereum’s shift in focus to layer-1 could provide Solana with a window to increase its market share, albeit with a more conservative approach to tokenomics and revenue allocation.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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