- According to a report by Michael Nadeau, founder of The DeFi Report has revealed that Ethereum has reclaimed 42% of DeFi outflows from Solana.
- Meanwhile, Solana recently overtook Ethereum in daily transaction fees on October 28.
Last week saw Ethereum face intensified FUD which saw ETH succumb to immense bearish pressure. As a result, for one, caused ETH to underperform against Bitcoin and Solana. Secondly, Solana was getting a shift in investor sentiment.
Now, the situation is reversing, Ethereum’s dominance in the DeFi sector is reclaiming a significant portion of value that flowed out to competing networks. This has been evident by a recent analysis by Michael Nadeau.
Nadeau’s findings reveal that although Solana received $2.36 billion in inflows from Ethereum year-to-date (YTD), 42% of this amount, or over $1 billion, has since returned to Ethereum.
Nadeau reports that Ethereum’s layer-2 networks, including Arbitrum, Optimism, and Base, have seen the most significant inflows of capital from Ethereum’s DeFi ecosystem. The rationale for these Layer 2 solutions is their ability to offer faster and cheaper transactions while maintaining Ethereum’s security.
The assets that left Ethereum mostly stayed within its ecosystem, Nadeau stated
With November upon us, ETH at the time of writing is swapping hands with $2,507.84 marking a 5.15% plummet in the past 24 hours. On a broader scale, the digital asset has recorded a 0.74% and 0.81% surge in the past week and month respectively.
Solana on the other hand is known for its speed, low transaction fees, and ability to host decentralized applications. Despite all these, it has faced challenges in attracting total value locked (TVL) from Ethereum and its layer-2 networks.
Nadeau commented that Solana’s long-term success hinges on drawing more TVL from Ethereum, which currently holds over $50 billion in TVL, according to data from DeFiLlama.
But the only thing that really matters for Solana is pulling TVL from Ethereum (and the L2s),
Nadeau shared in a recent X post, noting that Ethereum remains the primary repository of DeFi value. He added that Solana’s inflows from Ethereum YTD represented a “modest” 2.7% of its TVL, indicating limited success in capturing a meaningful share of Ethereum’s liquidity.
No. Adding some context (and data) changes the story regarding flows to Solana from other chains👇
Over the last month, @base is #1 in terms of net flows ($463m). @solana is #2 with $197m of net flows. @SuiNetwork #3 with $120m.
If we zoom out to Year-to-Date, @arbitrum… https://t.co/FXd7kqJ2YD pic.twitter.com/mqqfRnGxpc
— Michael Nadeau | The DeFi Report (@JustDeauIt) October 30, 2024
Interestingly, data from Artemis have shown that while Solana received some inflows, it lost around $55 million in TVL to Ethereum’s layer-2s like Base, Optimism, and Arbitrum.
This trend highlights the increasing preference for Ethereum’s extended ecosystem, where layer-2 chains provide users with a more attractive option compared to other layer-1 networks, balancing cost-efficiency with Ethereum’s strong security foundation.
Another notable occurrence as earlier reported, Solana recently overtook Ethereum in daily transaction fees on October 28. On that day, Solana generated $2.54 million in fees, surpassing Ethereum’s $2.07 million.
Meanwhile, Solana’s SOL is currently swapping wallets with $166.94 recording a 5.02% and 3.88%decline in the past 24 hours and past week respectively. Additionally, the digital asset has recorded a 14.04% surge in the past month.
