{"id":4143,"date":"2024-11-06T02:49:04","date_gmt":"2024-11-06T02:49:04","guid":{"rendered":"https:\/\/solanacrypto.news\/2024\/11\/06\/its-so-early-how-solana-is-competing-with-ethereum-for-institutional-interest-currency-news-financial-and-business-news\/"},"modified":"2024-11-06T02:49:04","modified_gmt":"2024-11-06T02:49:04","slug":"its-so-early-how-solana-is-competing-with-ethereum-for-institutional-interest-currency-news-financial-and-business-news","status":"publish","type":"post","link":"https:\/\/solanacrypto.news\/2024\/11\/06\/its-so-early-how-solana-is-competing-with-ethereum-for-institutional-interest-currency-news-financial-and-business-news\/","title":{"rendered":"\u2018It\u2019s So Early\u2019: How Solana Is Competing With Ethereum for Institutional Interest | Currency News | Financial and Business News"},"content":{"rendered":"<div>\n<ul>\n<li>Solana has garnered notoriety for its meme coin connection.<\/li>\n<li>But financial institutions are also interested in using the network to build their products.<\/li>\n<li>While Solana is newer than Ethereum, it doesn\u2019t face the same challenges when it comes to transaction throughput and cheap fees.<\/li>\n<\/ul>\n<p>It would be easy for a casual observer to think that the Solana network is for memecoins and Ethereum for financial institutions.<\/p>\n<p>While BlackRock CEO Larry Fink has preached the gospel of tokenization on Ethereum \u2014 his firm even <a target=\"_blank\" href=\"https:\/\/www.coindesk.com\/markets\/2024\/10\/25\/tokenized-treasuries-like-blackrocks-buidl-will-challenge-stablecoins-but-wont-fully-replace-them-jpmorgan\/\" rel=\"nofollow noopener\"><u>launching a tokenized fund<\/u><\/a>, BUIDL, on that blockchain \u2014 Solana has often made headlines this year <a target=\"_blank\" href=\"https:\/\/www.coindesk.com\/markets\/2024\/10\/22\/solana-token-issuer-pumpfun-rakes-in-big-bucks-with-1m-sol-in-lifetime-fees\/\" rel=\"nofollow noopener\"><u>thanks to the success of pump.fun<\/u><\/a>, a protocol that allows users to create memecoins in minutes.<\/p>\n<p>That, however, doesn\u2019t mean Ethereum has a monopoly on institutional interest, according to Hadley Stern, chief commercial officer at Marinade Finance, a Solana-based DeFi protocol that provides staking services for that blockchain&#8217;s {{SOL}} token.<\/p>\n<p>\u201cOn the institutional side, it&#8217;s so early,\u201d Stern, who was the founding president of Fidelity Digital Assets and global head of digital asset custody at BNY Mellon, told CoinDesk in an interview. \u201cWe could probably count on one hand the amount of TradFi products that are being built or have been built on Ethereum and Solana.\u201d<\/p>\n<p>\u201cI was brought on [Marinade] because there\u2019s a lot of product discovery around strong interest from institutions,\u201d Stern said. \u201cAsset managers, high net worth holders, individual holders, hedge funds \u2026 are interested in [staking on Solana].\u201d\n\t\t<\/p>\n<p>Launched in March 2020, Solana and SOL exploded on the crypto scene during the 2021 bull market partially thanks to support from FTX CEO Sam Bankman-Fried. SOL cratered when FTX collapsed, but staged a comeback in 2023 and, at $79 billion, is now the fifth largest cryptocurrency by market capitalization.<\/p>\n<p>Stern\u2019s assessment comes as financial giants such as <a target=\"_blank\" href=\"https:\/\/cryptoslate.com\/franklin-templeton-citigroup-turn-to-solana-for-next-gen-financial-services\/\" rel=\"nofollow noopener\"><u>Franklin Templeton<\/u><\/a>, <a target=\"_blank\" href=\"https:\/\/cryptoslate.com\/franklin-templeton-citigroup-turn-to-solana-for-next-gen-financial-services\/\" rel=\"nofollow noopener\"><u>Citibank<\/u><\/a> and <a target=\"_blank\" href=\"https:\/\/solanacompass.com\/learn\/breakpoint-24\/bp-2024-societe-generale-forge-bridging-the-gap-between-capital-markets-and-digital-assets\" rel=\"nofollow noopener\"><u>Soci\u00e9t\u00e9 G\u00e9n\u00e9rale<\/u><\/a> all announced new Solana-based projects last September during Breakpoint, the network\u2019s biggest yearly conference. And he wasn\u2019t the only one electrified by such institutional enthusiasm.<\/p>\n<p>\u201cAt Breakpoint, it was eye-opening to see how many people are now building on Solana,\u201d Tristan Frizza, founder of Solana-based decentralized derivatives exchange Zeta Markets, told CoinDesk in an interview. \u201cInstitutions are doing pretty crazy stuff.\u201d<\/p>\n<h2>Solana vs Ethereum<\/h2>\n<p>At first view, building on Ethereum can seem like a no-brainer for financial institutions. After all, it\u2019s the oldest and largest smart contract blockchain, it has the largest number of developers in the crypto ecosystem, it settles the majority of stablecoin transactions and it\u2019s the birthplace of DeFi. \u201cIf you work at a large bank and you&#8217;re trying to tokenize an asset, you&#8217;re not going to get fired for putting it on Ethereum,\u201d Bitwise Chief Investment Officer Matt Hougan recently <a target=\"_blank\" href=\"https:\/\/www.coindesk.com\/business\/2024\/10\/15\/why-this-etf-expert-is-bullish-on-ethereum-and-says-washingtons-crypto-stance-is-misunderstood\/?_gl=1*f2wqc9*_up*MQ..*_ga*NDE0NTI2MDE5LjE3MzA4MjYwMjE.*_ga_VM3STRYVN8*MTczMDgyNjAyMS4xLjAuMTczMDgyNjAyMS4wLjAuMTExODE3NjQyNw..\" rel=\"nofollow noopener\"><u>told<\/u><\/a> CoinDesk.<\/p>\n<p>But Ethereum isn\u2019t risk-free, according to Leah Wald, CEO of Sol Strategies, a crypto holding company that also runs a large Solana validator.\n\t\t<\/p>\n<p>\u201cThe uncertainty that continues around transaction fees certainly doesn&#8217;t make anyone comfortable,\u201d Wald told CoinDesk in an interview. \u201cIf you&#8217;re going to be if you&#8217;re an institution, and you&#8217;re thinking 10 years out, you can&#8217;t be building on a blockchain that you&#8217;re concerned about.\u201d<\/p>\n<p>\u201cBlackRock\u2019s BUIDL is based on Ethereum, and for what they&#8217;re trying to build, I think that&#8217;s perfectly fine,\u201d Wald added, but any kind of projects with high-volume transactions, like real-time payments or trading, might struggle. \u201cIf we\u2019re talking about a more sophisticated on-chain fund, or a financial platform, then there&#8217;s a real opportunity for Solana.\u201d<\/p>\n<p>In other words, nothing currently guarantees that Ethereum\u2019s scalability strategy, which hinges on <a target=\"_blank\" href=\"https:\/\/www.coindesk.com\/learn\/what-are-layer-2s\/\" rel=\"nofollow noopener\"><u>layer 2 blockchains<\/u><\/a>, will pay off, and the transformations the network has undergone in the last few years \u2014 like its <a target=\"_blank\" href=\"https:\/\/www.coindesk.com\/video\/how-eip-1559-has-affected-fees-on-ethereum\/?_gl=1*16gtag0*_up*MQ..*_ga*MTY4MzY1NzEyMC4xNzMwODM5MDgz*_ga_VM3STRYVN8*MTczMDgzOTA4Mi4xLjAuMTczMDgzOTA4Mi4wLjAuMTEyMTQ0NTIwMA..\" rel=\"nofollow noopener\"><u>monetary policy change<\/u><\/a>, or its transition <a target=\"_blank\" href=\"https:\/\/www.coindesk.com\/learn\/what-is-the-merge-and-why-has-it-taken-so-long\/#:~:text=Ethereum&#039;s%20shift%20to%20proof%2Dof,most%20anticipated%20events%20in%20cryptocurrency.&amp;text=The%20%E2%80%9CMerge%E2%80%9D%20is%20intended%20to,faster%20and%20more%20energy%20efficient.\" rel=\"nofollow noopener\"><u>from Proof-of-Work to Proof-of-Stake<\/u><\/a> \u2014 show that Ethereum is still figuring itself out.<\/p>\n<p>Solana\u2019s cheap transactions and low throughput, by contrast, don\u2019t hinge on the accomplishment of a complex and technical roadmap. And that can make all the difference.<\/p>\n<p>Wald noted, however, that in the U.S., Ethereum benefits from more regulatory clarity than Solana. The fact that the Securities and Exchange Commission approved spot ether exchange-traded funds this summer is likely a reassurance for institutions, even as inflows into those new funds <a target=\"_blank\" href=\"https:\/\/www.coindesk.com\/markets\/2024\/08\/28\/ether-spot-etf-flows-have-underwhelmed-versus-bitcoin-jpmorgan\/\" rel=\"nofollow noopener\"><u>have been disappointing<\/u><\/a>. A spot SOL ETF might be years away, depending on the outcome of today&#8217;s presidential election.\n\t\t<\/p>\n<h2>A different mindset<\/h2>\n<p>Another point where Solana tends to be underestimated, Frizza said, is in terms of technical innovations. While Ethereum is famous for its army of developers, builders on Solana tend to fly under the radar, even when they come up with new tools and products that can have an impact on crypto ecosystems beyond their own.<\/p>\n<p>\u201cPeople underrate what Solana enables from a structural perspective \u2014 and also the mindset that Solana builders have,\u201d Frizza said. \u201cThey really care about users, the product, building things that scale and that address user needs.\u201d<\/p>\n<p>To Frizza, that attitude means that, if another crypto mania occurs again, fascinating apps will come to light on Solana. Speaking of Zeta Markets, he said one priority was to \u201cbring down UX barriers and make it feel as easy as trading on Robinhood. That&#8217;s when you can really start opening up the funnel and bringing a lot of people in.\u201d<\/p>\n<p>Stern concurred. Memecoins aren\u2019t an innovation in themselves, he said, but the fact they were able to flourish on Solana in a way they couldn\u2019t on any other platform is a symptom of developers working at the highest level: pump.fun is simply taking advantage of a technical breakthrough. \u201cEthereum has a very hands-off relationship with an open source viewpoint, whereas I think the Solana Foundation does a better job from a business development standpoint,\u201d Stern said. \u201cSort of guiding the ship, but not in a completely controlling way, and letting a thousand flowers bloom.\u201d<\/p>\n<p style=\"font-style: italic;\">This story originally appeared on Coindesk<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Solana has garnered notoriety for its meme coin connection. But financial institutions are also interested in using the network to build their products. While Solana is newer than Ethereum, it doesn\u2019t face the same challenges when it comes to transaction throughput and cheap fees. It would be easy for a casual observer to think that [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4143","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/posts\/4143"}],"collection":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/comments?post=4143"}],"version-history":[{"count":0,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/posts\/4143\/revisions"}],"wp:attachment":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/media?parent=4143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/categories?post=4143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/tags?post=4143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}