Ethereum, Solana Value Transfer as Liquidity Tightens

Solana and Ethereum persist in their efforts to facilitate value transfers, adapting to the evolving market landscape and changing dynamics.

Suddenly, 42% of the value transferred from Ethereum (ETH) to Solana (SOL) has been redirected back to the former. In the past year, Solana has received inflows from various blockchains. According to Michael Nadeau, the founder of The DeFi Report, Ethereum received a more significant proportion of these transactions. In its Year-to-date (YTD) chart, Solana documented $2.36 billion in Ethereum inflows.

Nevertheless, Ethereum received over $1 billion in remittances, which accounted for 42% of the total.

Solana Experiences a Million-Dollar Loss in TVL Due to Base, Optimism, and Arbitrum

Additionally, he recognized the necessity for Solana to extract Total Value Locked (TVL) from Ethereum and Layer-2 networks. “[…] However, Solana’s primary concern is the removal of TVL from Ethereum (and the L2s). For what reason? That is the current location of all values. Is it currently occurring? In an X post on Wednesday, Nadeau stated, “Not really.”

To provide additional context, the proprietor of DeFi Report referenced data from the crypto data platform Artemi. Nadeau observed that Solana had suffered a loss of approximately $55 million in TVL to Base, Optimism, and Arbitrum year-to-date. Additionally, the flow to Solana from Ethereum YTD was “modest.” It comprised only 2.7% of Solana’s TVL. Ethereum’s TVL is estimated to be around $50 billion, according to DeFiLlama data.

Ethereum experienced approximately $6 billion in net outflows year-to-date; 83% of this value was transferred to L2 chains within the ecosystem. As a result, Nadeau is confident that these assets will continue to generate value for Layer 1. He predicted that most of the value had not utterly exited the chain but was utilized within its ecosystem.

On October 28, Solana generated over $2.54 million in revenue within 24 hours by flipping Ethereum in daily transaction fees. This was substantially greater than Ethereum’s $2.07 million. Solana was the fifth-largest fee-generating protocol as a consequence of this outlook. Solana’s daily fees increased primarily due to the increased activity on the decentralized exchange Raydium.

On that particular day, the Solana blockchain generated fees totaling $3.41 million, with Raydium being the sole contributor. Pump, in the same vein, is the launchpad for memecoin. Fun has contributed approximately $29.5 million to Solana’s $61.7 million fees in the past month.

What is the feasibility of a Solana ETF?

VanEck and 21Shares submitted a filing to the United States Securities and Exchange Commission (SEC) in July to list the Solana ETF. The Solana ETFs were urged by the Chicago Board Options Exchange (CBOE) to be approved by the SEC in their two separate filings. “SOL is the third most actively traded cryptocurrency after Bitcoin and Ether,” according to Rob Marrocco, the global manager of ETP listings at Cboe Global Markets.”

Rumors of denial or the firms reconsidering their applications were sparked when both filings were removed from CBOE’s website shortly after. Nate Geraci, the President of the ETF Store, even went so far as to imply on X that the removal confirms SEC Chair Gary Gensler’s reluctance to authorize a Solana ETF during his tenure.

Canary Capital submitted an application to the US Securities and Exchange Commission (SEC) for a spot in Solana ETF. As per the investment firm’s S-1 registration statement, the offering’s objective is to monitor the price of SOL through the Chicago Mercantile Exchange CF Solana index, a real-time price benchmark.