With the Solana blockchain’s milestone over time, the Bank of America is confident that the blockchain could take market share from Ethereum.
The Bank of America (NYSE: BAC) referred to the Solana blockchain as possibly becoming the “Visa of the digital asset ecosystem.” After hosting Solana Foundation member Lily Liu, the Bank released a research note explaining the fantastic features of the blockchain. Addressing its clients, the Bank of America noted that Solana is easy to use while offering low transaction fees. The financial services company also wrote about the blockchain’s focus on scalability.
Since its launch in 2020, the Solana blockchain has been significantly expanding, conducting more than 50 billion transactions. Meanwhile, global payments giant Visa Inc (NYSE: V) settled 164.7 billion in the year ended on the 30th of September. According to the Bank of America analyst Alkesh Shah, the total value locked on the Solana blockchain is over $11 billion. Also, the blockchain has been used in minting more than 5.7 million non-fungible tokens (NFTs). In the note, the Bank added that Solana is highly effective for consumer use cases, including gaming and micropayments.
Analyst Shah stated:
“Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has trade-offs, illustrated by several network performance issues since inception. Ethereum prioritizes decentralization and security but at the expense of scalability, which has led to periods of network congestion and transaction fees that are occasionally larger than the value of the transaction being sent.”
Based on the note, the analyst attributed Solana’s ability to offer the innovation to its proof of history blockchain. The analyst said it enhanced the blockchain’s performance of its proof of stake consensus mechanism. In addition, SOL has grown more than 4,000% in the last twelve months. He said:
“These innovations allow for the processing of an industry-leading 65,000 transactions per second with average transaction fees of $0.00025 while remaining relatively decentralized and secure.”
Bank of America Analyst Says Solana Could Take Market Share From Ethereum
With the Solana blockchain’s milestone over time, the Bank of America is confident that the blockchain could take market share from Ethereum. Shah said in the note that Solana’s differentiation is “proving successful,” and its cryptocurrency SOL could grab Ethereum’s market share.
Solana is currently the fifth-largest cryptocurrency by over $47 billion market capitalization. On the other hand, Ethereum (ETH) is the second-largest crypto asset with a market valuation of $398 billion. Comparing Solana with Ethereum, Shah wrote that the Ethereum blockchain focuses more on decentralization at the expense of scalability.
Additionally, Solana’s total return year-over-year dominates Ethereum’s. Despite this, both cryptocurrencies declined around 20% last month as major cryptos recorded losses.
At the time of writing, SOL is trading at $151.60 while ETH is at $3,343.96.
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