The Solana community briefly surpassed Ethereum in whole staked worth of their respective native tokens, SOL and ETH, sparking debate over whether or not it’s truly bullish or bearish for Solana.
Greater than $53.9 billion price of SOL is now staked on the Solana community from 505,938 distinctive pockets holders, who’re making an 8.31% annualized return, blockchain knowledge exhibits.
The determine briefly overtook the staked ETH market cap on April 20, which now has $53.93 billion price of worth secured from 34.7 million staked tokens, Beaconcha.in data exhibits.
A contributing issue behind the flippening has been SOL’s strong price performance relative to ETH during the last two years, which has seen the SOL/ETH value ratio rise practically tenfold from 0.0088 to 0.0866 since June 12, 2023, CoinGecko data exhibits.
Excessive SOL staking return is stifling Solana DeFi, pundits say
Nevertheless, the “risk-free” 8.31% return for SOL stakers on the community stage — considerably increased than ETH’s 2.98% — could also be attracting Solana customers away from DeFi actions, akin to offering liquidity to automated market makers and lending protocols in trade for token rewards.
“Solana having 65% of its marketcap staked means there is no different use of it is token, it’s truly bearish,” Builda Protocol developer and X person “JC” said.
DefiLlama data exhibits that there are $21.5 billion price of liquid staked ETH tokens on Ethereum in comparison with simply $7.22 billion of liquid staked SOL on Solana.
Multicoin Capital managing associate Tushar Jain beforehand said that Solana DeFi has been stifled as a result of it’s not rational to make an funding in one thing that produces a decrease return than the “risk-free” funding.
“It doesn’t make sense so that you can present liquidity on a SOL/USDC AMM when that may earn you 5% however staking earns you 7%.”
Ethereum additionally dominates when it comes to DeFi whole worth locked at $50.4 million in comparison with Solana’s $8.85 billion.
Trade pundits additionally pointed out that there are nonetheless much more validators securing the Ethereum community at 1.06 million in comparison with Solana’s 1,243.
Solana staking isn’t actually staking, Ethereum researcher argues
One Ethereum researcher mentioned Solana staking isn’t actually securing the Solana community as a result of there isn’t a mechanism to penalize bad actors for malicious habits.
“It’s totally ironic to name it ‘staking’ when there isn’t a slashing. What’s at stake?” Dankrad Feist said in an April 20 X put up.
“Solana has near zero financial safety in the meanwhile.”
Solana Labs said slashing is already potential, nevertheless it’s not automated, and the attacker’s property can solely be slashed by restarting your complete community.
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Solana is trying to roll out a extra complete slashing resolution later this yr, according to Multicoin Capital Managing Companion Kyle Samani.
Solana Labs CEO Anatoly Yakovenko said he’s pushing for a “correlated slashing” mechanism, the place the penalty could be equal to the sq. of the distinction between a validator’s defective stake in an epoch and the median community staked validator.
In the meantime, Ethereum builders and researchers have been exploring methods to decentralize Ethereum staking.
Many Ethereum stakers have resorted to liquid staking protocols over the previous few years as a result of excessive 32 ETH ($50,750) minimal wanted to run an impartial validator.
Nevertheless, this shift has led to the Lido protocol capturing an 88% share in Ethereum’s liquid staking market, including one other layer to Ethereum’s staking centralization considerations.
Journal: Comeback 2025: Is Ethereum poised to catch up with Bitcoin and Solana?
