The Solana network briefly surpassed Ethereum in total staked value of their respective native tokens, SOL and ETH, sparking debate over whether it is actually bullish or bearish for Solana.
More than $53.9 billion worth of SOL is now staked on the Solana network from 505,938 unique wallet holders, who are making an 8.31% annualized return, blockchain data shows.
The figure briefly overtook the staked ETH market cap on April 20, which now has $53.93 billion worth of value secured from 34.7 million staked tokens, Beaconcha.in data shows.
Source: Alex Svanevik
A contributing factor behind the flippening has been SOL’s strong price performance relative to ETH over the last two years, which has seen the SOL/ETH price ratio rise nearly tenfold from 0.0088 to 0.0866 since June 12, 2023, CoinGecko data shows.
High SOL staking return is stifling Solana DeFi, pundits say
However, the “risk-free” 8.31% return for SOL stakers at the network level — significantly higher than ETH’s 2.98% — may be attracting Solana users away from DeFi activities, such as providing liquidity to automated market makers and lending protocols in exchange for token rewards.
“Solana having 65% of its marketcap staked means there’s no other use of it’s token, it’s actually bearish,” Builda Protocol developer and X user “JC” said.
DefiLlama data shows that there are $21.5 billion worth of liquid staked ETH tokens on Ethereum compared to just $7.22 billion of liquid staked SOL on Solana.
Multicoin Capital managing partner Tushar Jain previously said that Solana DeFi has been stifled because it’s not rational to make an investment in something that produces a lower return than the “risk-free” investment.
“It doesn’t make sense for you to provide liquidity on a SOL/USDC AMM when that might earn you 5% but staking earns you 7%.”
Ethereum also dominates in terms of DeFi total value locked at $50.4 million compared to Solana’s $8.85 billion.
Industry pundits also pointed out that there are still far more validators securing the Ethereum network at 1.06 million compared to Solana’s 1,243.
Solana staking isn’t really staking,…
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