Solana recently surpassed Ethereum in terms of the total amount of its native token (SOL) staked, sparking quite a bit of discussion. Some see it as a solid bullish signal for Solana’s future, while others aren’t so sure. This sparked controversy about whether this is really a positive sign or just a short-term hype.
According to blockchain data, over $53.9 billion is currently staked on the Solana network by 505,938 individual wallet holders. These users are getting an annual return of around 8.31% on their staked assets. On Apr. 20, the figure briefly surpassed the staked market cap. As of now, there’s $53.93 billion locked in from 34.7 million staked tokens, according to Beaconcha.in data.
Solana’s growth and its impact on DeFi
A contributing factor behind the flippening is SOL’s impressive price growth compared to Ethereum over the last two years. Since June. 12, 2023, the SOL/ETH price ratio has surged nearly tenfold, rising from 0.0088 to 0.0866, according to CoinGecko data.
However, the “risk-free” 8.31% return for SOL stakers at the network level is a major draw — it’s much higher than Ethereum’s 2.98%. These returns could be pulling Solana users away from DeFi activities, like providing liquidity to automated market makers and lending protocols in exchange for token rewards. Builda Protocol developer and X user “JC” said:
Solana having 65% of its marketcap staked means there’s no other use of it’s token, it’s actually bearish.
DefiLlama data revealed that Ethereum has $21.5 billion in liquid staked ETH tokens, while Solana only has $7.22 billion in liquid staked SOL. Multicoin Capital managing partner Tushar Jain previously explained that Solana’s DeFi has struggled to make progress.
He said that it’s hard to justify investing in something that offers lower returns compared to a “risk-free” investment. Ethereum leads in DeFi total value locked, with $50.4 billion, while Solana stands at $8.85 billion. Additionally, experts have highlighted a significant difference in the number of validators securing each network.
Ethereum has 1.06 million validators, far outpacing Solana, which has only 1,243. An Ethereum researcher said that Solana staking doesn’t actually secure the network. The reason? There’s no mechanism to sanction bad actors for malicious actions.
