Swiss Crypto Bank Sygnum Suggests That Solana (SOL) Could Become a Serious Contender to Ethereum (ETH)

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A Swiss crypto bank has suggested that Solana (SOL) could become a serious contender to Ethereum (ETH), especially if financial institutions continue choosing it for real-world asset tokenization platforms and stablecoins.

In an Oct. 1 report, Sygnum noted that some “conservative institutions” may prefer Solana’s scalability over Ethereum’s stability and security.

“A PayPal executive recently claimed at a Solana event that ‘Ethereum is not the best solution for payments,'” the report added.

Sygnum also highlighted that Visa has integrated Solana for USD Coin (USDC) settlements thanks to its high throughput and low costs. Franklin Templeton is also planning to launch a mutual fund on Solana, and Citi is reportedly considering using Solana for cross-border payments.

However, the report also noted that Ethereum still leads in the tokenization and stablecoin markets with 81% and 49% shares, respectively, compared to Solana’s sub-3% share. Another factor to consider is that Ethereum’s market cap exceeds Solana’s by over $218 billion.

Sygnum also claims that some of Solana’s volume metrics are overstated, and much of the network revenue is largely influenced by memecoin issuance and trading.

Former American intelligence contractor and whistleblower Edward Snowden also recently slammed Solana for being too centralized and claimed that “anything significant” built on the network could easily be disrupted “if states begin moving toward it.”

Despite the criticism, Solana’s price has surged dramatically, outperforming Ether by 300% year-on-year and 600% since the start of 2023.

Meanwhile, Sygnum noted that Ethereum, despite recent underperformance, remains more attractive to traditional investors than Bitcoin due to its connection to economic activity and network revenues, akin to equity investments.

“The risks of ETH being labeled a security have also diminished after the US regulator closed its investigation into Ethereum in June, whereas Solana still faces potential scrutiny,” the report adds.

Sygnum concludes that for Solana to challenge Ethereum in the long run, it must lead future technological cycles and foster groundbreaking decentralized applications that drive widespread adoption. Sygnum manages $4.5 billion in client assets, operating from hubs in Zurich and Singapore.

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