30s Summary

Ether (ETH) headed the pack in onchain activity in the past month, reaching $149.9 billion, beating competitor BNB Chain’s $26.6 billion. Despite relatively high transaction fees, Ethereum’s growth is said to be buoyed by “layer-2” scaling solutions. Meanwhile, Solana is emerging as a notable player, leading in decentralized exchange volumes and seeing 83% onchain volume growth. Despite this, it is argued Ethereum’s 2.6% adjusted return makes it more attractive than Solana’s 1%. Ethereum’s challenge is scaling without disrupting its layer-2 ecosystem, which its 3.0 version hopes to address with sharding and a zero-knowledge Ethereum Virtual Machine.

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From September 13 to 19, the price of Ether (ETH) had a tough time staying above $3,200. Despite this, compared to some of Ethereum’s direct competitors, onchain data seems to be looking up. Everyone’s now wondering when Ether will pick up and power on with its growth, given how well it’s doing in terms of fees and network deposits.

Let’s put it into perspective, none of the other blockchains come close to Ethereum’s whopping $149.9 billion in onchain activity in the last month. The next biggest player, BNB Chain (BNB), managed to hit only $26.6 billion, which is 82% smaller, even though its transaction fees are much lower. What’s more, Ethereum’s activity increased by a solid 37.7% in the past month, while BNB Chain actually went down by 6% in terms of volume.

Now, some people argue that Ethereum’s average transaction fee of $7.50 could stall its growth and user uptake. But, this view doesn’t take into account the rise of “layer-2” scaling solutions like Arbitrum, Base, and Optimism. In the end, these systems still depend on Ethereum’s core layer for security and final judgements, so more independent validators and staking deposits are being encouraged.

Another key player on the block is Solana, which is showing a lot of potential, with its amazing 83% onchain volume growth recently. This is largely thanks to a total value locked (TVL) of $8.3 billion. Even though its deposits are a lot smaller than Ethereum’s $59.4 billion, Solana is leading the way in decentralized exchange (DEX) volumes.

Ethereum remains the big boss when it comes to fees, which are really important for keeping the network secure. In just 30 days, it pulled in $163.7 million in fees, according to DefiLlama. But in the same period, Solana earned $133.4 million, with Tron trailing in third place at $51 million.

On the flip side though, while people criticize Ethereum for not making enough from its layer-2 rollups, Solana faces the same issue. The people staking and investing in SOL (Solana’s token) aren’t getting much of a slice of the pie from the success of its DApps.

Solana’s staking reward rate stands at 6.2% annually, compared to Ethereum’s 3.3%. Even though it seems minor, Ethereum’s 2.6% adjusted return is a way better deal than Solana’s 1%. This puts Ethereum in a good spot to attract more big money deposits.

One big challenge for Ethereum is figuring out how to scale up without messing up its layer-2 ecosystem. Ethereum 3.0 plans to tackle this by introducing something called sharding and using a zero-knowledge Ethereum Virtual Machine (zkEVM) at the base layer. Executing these goals could take a few years though.

Looking at the onchain perspective and considering its competitive edge, Ether could outshine most other altcoins, but it all depends on how well it follows through with its plans.