Introduction
In January 2023, SOL's trading price was discounted by 97% against ETH. By mid-2024, this gap narrowed to 83%, reflecting shifting market dynamics. With Ethereum's scalability roadmap under scrutiny and Solana positioning itself as a potential "on-chain Nasdaq," the disparity continues to shrink.
This analysis shifts focus from traditional KPIs (fees, DEX volume, TVL) to the actual value token holders derive from staking and MEV (Maximal Extractable Value).
Actual Value for Token Holders
Solana’s Value Proposition
MEV Sharing: Validators running Jito’s block engine share 94% of MEV with stakers (after a 6% fee).
- Example: Staking SOL via Helius (hSOL) retains 100% of MEV for holders.
- Priority Fees: Validators currently keep 100% of priority fees, but Jito’s upcoming fee router may redistribute these to stakers.
Ethereum’s Value Proposition
- MEV + Priority Fees: Validators share earnings with stakers, but Lido (leading LST) deducts a 10% fee.
- Layer-2 Dynamics: As transaction volume migrates to L2s, MEV may shift to priority fees on chains like Base (85% of Base’s fees are priority fees).
Key Comparison
| Metric | Solana | Ethereum |
|----------------------|-------------|-------------|
| TVL Ratio | 1x | 6.6x |
| Stablecoin Supply | 1x | 10x |
| Holder Value (YTD)| 3.6x Higher | Baseline |
Why the Discrepancy?
- Execution Speed: Solana’s high throughput monetizes TVL more efficiently.
- Integrated Model: Solana combines execution (like Nasdaq) and settlement (like DTCC), whereas Ethereum’s L2s fragment value capture.
Yield Analysis
Issuance Yields
- Solana: 7.3% annualized (declining 15% yearly to 1.5% terminal inflation).
- Ethereum: 2.78% annualized (0.64% net inflation).
👉 Discover how staking yields impact long-term holdings
Total Returns (Including Issuance)
| Network | Issuance Yield | MEV + Fees | Total Yield |
|----------|---------------|------------|------------|
| Solana | 7.3% | 3.2% | ~10.5% |
| Ethereum | 2.78% | 0.9% | ~3.7% |
Sources of Value
Solana’s Dominant Use Case: Memecoins
- 51% of DEX volume stems from memecoins (35% SOL/USD, 14% stablecoins/LSTs).
- Stress Testing: Memecoin trades refine infrastructure for future asset classes (stocks, bonds).
Ethereum’s Future: Tokenized Assets
- Potential to host trillions in tokenized assets (stocks, bonds).
- Critical question: Can ETH holders capture this value?
👉 Explore tokenization’s impact on blockchain value
MEV: A Long-Term Value Driver
Ethereum’s MEV Workflow
- Transactions enter mempool.
- Seekers identify arbitrage.
- Block builders package trades (with tips).
- Validators approve blocks, retaining most tips.
Unknown: How L2 adoption affects MEV redistribution.
Solana’s MEV Mechanism
- Jito’s Rolling Mempool: 200ms windows for private arbitrage.
- 50% of MEV is shared with stakers via Jito’s tip router.
Key Takeaway: SOL holders currently access more MEV value than ETH holders.
FAQ
Q1: Why is Solana’s holder value higher despite lower TVL?
A1: Faster execution and integrated MEV sharing monetize activity more efficiently.
Q2: Will Ethereum’s L2s dilute ETH holder value?
A2: Likely, unless ETH captures value via restaking or fee adjustments.
Q3: Are memecoins sustainable for Solana?
A3: Short-term yes (UX advantage); long-term, the chain aims to host diverse assets.
Q4: How does MEV differ between chains?
A4: Ethereum’s is mempool-based; Solana’s is via private rolling windows.
Conclusion
Should SOL trade at a 68% discount to ETH? Fundamentally, no. Ethereum’s Lindy effect and TVL dominance justify a premium, but the gap overstates Solana’s risks.
- For ETH: Success hinges on deriving value from tokenized assets and L2 fee structures.
- For SOL: Capital inflows may accelerate if it sustains higher holder yields.
As Benjamin Graham noted: Markets weigh fundamentals long-term. While narratives drive crypto today, value capture will ultimately dictate prices.
Final Thought: Watch for ETH’s restaking innovations and Solana’s priority fee reforms—both could reshape holder economics.