Although investors ‘have been heavily’ allocating to Solana throughout 2023, Ethereum will still be the top smart contracts platform in 2024, Coinbase says.
In a new report titled “2024 Crypto Market Outlook,” Coinbase noted that throughout 2023 net fund inflows to Solana-related (SOL) investment funds were second only to Bitcoin (BTC), surpassing Ethereum (ETH) and other multi-asset funds flows.
Analysts at the U.S.-based crypto exchange attributed the surge in Solana investment to the network’s ability to handle high transaction volumes and low fees, which they say are necessary to support a new wave of highly performant applications.
“Indeed, we believe that improved transaction throughput and lower fees are necessary to improve UX to onboard a series of new use cases, and Solana has an early lead in that regard.”
Coinbase
Despite the growing popularity of Solana, Ethereum is still the most important smart contract platform in the cryptocurrency space, Coinbase noted. Processing an average of around 1 million transactions per day and maintaining a consistent daily transfer volume between $1 billion and $3 billion, Ethereum’s status as the top platform for decentralized applications “may not be displaced anytime soon,” Coinbase claims.
As of press time, ETH is trading at $2,280, demonstrating a 91% year-to-date increase, according to CoinGecko data. Solana’s SOL is trading at $78.3 with a staggering 697% increase in 2023.
Coinbase noted though that while Ethereum dominance in the smart contract space is likely to persist in the near future, Solana’s scalability and performance could make it a viable alternative for some use cases in 2024.
The exchange’s experts added that in addition to Solana, a group of other layer-1 networks such as Aptos, Sui, Sei, and others are likely to increase competition in the space as they “handle scalability demands at the base layer.”