Ethereum
Solana overtakes Ethereum in revenue after parabolic fee hike
The Solana community is celebrating record revenues, but the milestone is a sign that users are paying high transaction fees.
The turf war between Solana and Ethereum supporters continues to escalate, with the Solana community celebrating for the first time as the network surpasses Ethereum in daily revenue.
On May 12, the total economic value of Solana – transaction fees combined with the maximum extractable value (MEV) – surpassed that of Ethereum for the first time, according to data from Blockworks Research.
The chart, which was widely shared on social media, shows Solana generating nearly $2.25 million in revenue over 24 hours, outpacing Ethereum’s $1.98 million by almost 13%.
This milestone was celebrated throughout the Solana community, with supporters heralding it as a sign that Solana will soon benefit from a reversal on Ethereum.
“For the first time ever, Solana recently eclipsed Ethereum in terms of daily economic value.” said Joe McCann, founder of Asymmetric, a cryptocurrency investment company. “Friendly reminder that SOL currently represents 1/5th of the value of ETH.”
“[Solana] is always 100 times cheaper for users,” tweeted Ansem, a popular trader and influencer. “Explain to me in detail why ETH is still worth 5x more in terms of market cap.”
But not everyone was convinced, with Ethereum’s dynamic layer 2 ecosystem notably absent from Blockworks’ data.
“It is crucial to remember that this comparison only includes the Ethereum mainchain, without considering the value of ETH as a payment method and transaction fuel for various layer 2 networks.” retorted Leon Waidmann, analyst at BTC-Echo. “This makes the comparison flawed… people underestimate how positive L2 adoption is for Ethereum’s currency premium.”
Solana Fees Skyrocket
Solana’s recently skyrocketed fees were also conveniently ignored during the network’s revenue milestone celebrations.
One of Solana’s key value propositions is its high throughput, with the network regularly hosting between 2,000 and 3,000 transactions per second (TPS) in recent days.
However, recent network congestion has caused a volume of transactions to fail to execute, with Dune Analytics data showing over 60% Solana transactions have failed over the past month. The number of successful Solana transactions also fell by more than 50% since the beginning of November.
To combat congestion, Solana users have been forced to pay increasingly higher fees to ensure their transactions are executed. Solana’s average transaction fees reached new all-time highs above $0.018 in March and posted an all-time high of $0.06 on March 18.
Average Solana transaction fees. Source: Dune Analytics.
Although Solana’s fees have since dropped to $0.0136, Solana users are still paying significantly higher amounts to transact compared to mainstream Ethereum Layer 2 after the Dencun upgrade in March.
According to data from GrowThePie, the average transaction fees on Arbitrum, Optimism and Linea currently stand at $0.005, $0.006 and $0.012 respectively.
Data from The block also shows that more than 75% of Solana’s transaction revenue was attributed to non-voting priority fees from February to May.
No-vote priority fees are additional fees that users pay to prioritize their transactions over others in a crowded network, excluding votes for network validators. These fees help ensure that their transactions are processed faster, even during heavy network traffic.
Ethereum’s continued dominance
Despite the buzz surrounding Solana’s revenue milestone, Ethereum continues to dominate web3 according to many key metrics.
Ethereum continues to beat Solana in terms of decentralized exchange volume, enjoying a 33% daily lead and a 26% weekly lead, according to DeFi Llama.
Furthermore, the analysis of Messari shows that Ethereum enjoys a 300% lead according to its “real volume” metric – which seeks to filter out wash transactions when measuring the value of on-chain activity. As of May 13, Solana’s actual volume was $6.77 billion, significantly behind Ethereum’s $24.8 billion.
Ethereum’s DeFi total value locked (TVL) is also $53.6 billion, significantly eclipsing Solana’s $4.5 billion. Ether also has a market capitalization of $354.8 billion, compared to SOL’s $111.3 billion.