One of crypto’s greatest rivalries boils down to memecoins

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Ethereum and Solana will go down as one of crypto’s greatest rivalries.

ETH bears would say Vitalik’s modular scaling roadmap — which has now spawned more than 100 satellite blockchains — is doomed to accrue little value to the base asset. 

After all, what’s the point in pushing onchain activity away from mainnet and onto smaller networks, if that activity doesn’t somehow translate to higher ETH prices?

Solana has otherwise made huge strides concentrating its community on just one chain — to the point that Solana’s DEX volumes have now eclipsed that of Ethereum mainnet plus 13 others.

The chart above shows Solana’s DEX volume market share against Ethereum and 13 layer-2s over the past 18 months, including Base, Arbitrum, Optimism, Scroll, Mantle, ZKSync, Polygon, Polygon zkEVM, World Chain, Zora, Linea, Blast and Arbitrum Nova.

In the past two weeks, Solana DEXs have handled $45.1 billion in volume, largely propelled by all-time highs on Raydium. Ethereum and its orbiting networks have seen less than $40.2 billion (only!).

We know that memecoin traders are driving a huge portion of that volume, whether it’s within the Ethereum context or on Solana (over 80% of weekly DEX volume on Solana is memecoins, per Blockworks Research data).

It’s however the first time that Solana has handled more weekly DEX volume than this particular slice of the Ethereum ecosystem.

What this means is that the public perception of both SOL and ETH (and to some extent all the other layer-1 base assets out there) rests on whether:

1. Memecoin traders will gravitate toward those ecosystems, and
2. Prices for the native cryptocurrencies will go up as a result.

With bitcoin — which leads the market right now — perhaps range-bound until the US election plays out, tracking price growth can be a noisy process. 

So, tracking price ratios between two assets can show more realistic trends. The ETH/BTC ratio, for instance, is at its lowest point since April 2021. That reflects a market that has bought into the Bitcoin value prop more than it has for Ethereum’s, at least during our current bull cycle.

Meanwhile, both the SOL/ETH and TON/ETH ratios have hit new highs in the past few months, as shown by the chart above, with the former still at those levels.

One wonders, then if crypto markets are really so efficient that they’ve picked the right winners.

To which I’d say: Do you want to be right, or do you want to make money? 

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