Layer-1 Blockchain Solana may have evolved into a “one-trick pony” for Memocoin generation and trading, according to a recent standard charter report.
According to a standard, certified research report from May 27, shared with Cointelegraph, Solana dominates “in areas that require large amounts of low transaction cost solutions because it has a design that prioritizes fast and inexpensive transaction verification.” The report suggested that this had unintended consequences.
“So far, this has been primarily at Memecoin Trading, making up a large part of our activities at Solana (measured by application revenue, ‘GDP’). ”
Standard Chartered said Memecoin Frenzy served as a stress test for Solana’s scalability, but it has drawbacks due to the volatility and speculative nature of such assets. As Memecoin’s trading volume decreases, banks warned that Solana could struggle to maintain momentum.
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Memecoin Trading passed the peak
The report states that Solana-based Memocoin’s activity has surpassed its peak, with “a reduction in usage and trading that “cheap” decline is not a good mix.” The bank suggested that Solana should expand to other sectors where it needs to process large volumes of transactions cheaply and quickly.
According to the report, these sectors can include traditional consumer apps such as high-throughput financial apps and social media. Still, according to the bank, scaling such applications can take years, and Solana has terrible consequences.
“As a result, I expect Solana to be below Ethereum for the next two or three years, at least in actual terms.”
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Solana’s edge is declining
Solana has long positioned as a fast, inexpensive Layer-1 blockchain with smart contract support, and is in direct competition with Ethereum. However, its edges may be narrower.
The Ethereum Layer-2 platform has been catching up to Solana in terms of average transaction costs since the Dencun network upgrade in March 2024. This shift puts pressure on Solana’s value proposition as the cheapest high-throughput blockchain. Standard Chartered acknowledged that Ethereum’s modular design, which separates data availability, implementation and consensus, allowed for more efficient scaling while maintaining decentralization.
“The modular approach allows Ethereum to scale transactions at a low cost (post-dencon upgrade) while maintaining the security benefits of a highly decentralized mainnet blockchain.”
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