Layer-1 blockchain Solana could also be evolving right into a “one-trick pony” for memecoin technology and buying and selling, based on a latest Normal Chartered report.
Based on a Could 27 Normal Chartered analysis report shared with Cointelegraph, Solana “dominates in areas that demand high-volume, low-transaction-cost options” attributable to its design prioritizing quick and low-cost transaction affirmation. The report urged this has had an unintended consequence:
“Up to now, this has been largely in memecoin buying and selling, which accounts for almost all of exercise on Solana (as measured by ‘GDP’, which is utility income).”
Normal Chartered stated the memecoin frenzy served as a stress take a look at for Solana’s scalability however got here with drawbacks as a result of volatility and speculative nature of such belongings. As memecoin buying and selling volumes decline, the financial institution warned that Solana could wrestle to keep up momentum.
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Memecoin buying and selling handed its peak
Normal Chartered stated Solana-based memecoin exercise is previous its peak, and “declining utilization and buying and selling ‘low-cost’ will not be a very good combine.” The financial institution urged that Solana ought to broaden into different sectors that require processing giant volumes of transactions cheaply and rapidly.
Per the report, these sectors may embrace high-throughput monetary apps and conventional client apps equivalent to social media. Nonetheless, scaling such functions could take years, based on the financial institution, with dire penalties for Solana:
“Consequently, we count on Solana to underperform Ethereum over the subsequent two to 3 years, earlier than catching up, no less than in actual phrases.”
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Solana’s edge is fading
Solana has lengthy positioned itself as a quick and cheap layer-1 blockchain with sensible contract help, competing straight with Ethereum. Nonetheless, that edge could also be narrowing.
Ethereum layer-2 platforms have caught up with Solana by way of common transaction price because the Dencun community improve in March 2024. This shift has put stress on Solana’s worth proposition as the most affordable high-throughput blockchain. Normal Chartered acknowledged that Ethereum’s modular design, which separates knowledge availability, execution and consensus, has allowed it to scale extra effectively whereas preserving decentralization:
“The modular strategy permits Ethereum to scale transactions at a low price (post-Dencun improve) whereas sustaining the safety advantages of a extremely decentralised mainnet blockchain.”
Journal: Memecoins are ded — However Solana ‘100x higher’ regardless of income plunge
