Solana’s rapid network growth and escalating on-chain activity have exceeded that of rival Ethereum in recent weeks, yet the token's market value remains at a fraction of its rival’s. 

Hovering at around $100 billion, Solana's (SOL) market capitalization is pegged at just 25% to Ethereum’s $391 billion. Some believe that could be about to change.

The upstart has continued to peck away at Ethereum, beating out the number two blockchain in key metrics along the way, according to thesis-driven crypto hedge fund Syncracy Capital.

In recent months, Solana-based decentralized applications (dApps) collectively surpassed Ethereum dApps in revenue generation, a milestone that industry observers say indicates its growing utility.

In a report published Tuesday, Syncracy pointed to real economic value (REV) and total application revenue (TAR), which together indicate a blockchain’s value creation, it said.

REV shows demand for blockspace by tracking fees paid to validators, reflecting the blockchain’s financial health. TAR, on the other hand, measures demand for applications through fees paid to protocols, benefiting token holders and developers.

“These fees accrue to token holders and application builders as opposed to blockchain validators, and they provide a strong indicator of a blockchain’s economic output,” Syncracy’s co-founder Ryan Watkins wrote in the report. “As Solana’s economy continues expanding, both these metrics should increase over time.”

Solana’s network continues to draw attention due to its expanding ecosystem, low transaction costs, and appeal to developers and retail users. The network has emerged as a leading hub for trading activity, particularly in retail and newer sectors such as decentralized physical infrastructure networks (DePINs).

Since the collapse of crypto exchange FTX in November 2022, a former backer of Solana, the network, and its native token have been gunning for a recovery. The asset is up 277% from 12-month lows to $211.84, per CoinGecko data.

Contributors to Solana’s surge include applications focused on trading and decentralized finance, as well as speculative markets, including meme coins.

Solana's flagship meme coin trading platform, Pump.fun, recently reported $100 million in revenue within its first seven months, making it the fastest-growing protocol by revenue growth in crypto’s history.

While Ethereum has long led in institutional support, developer activity, and total on-chain assets, Solana’s proponents argue that its technical architecture offers a compelling alternative.

Solana’s parallelized proof-of-work and proof-of-history system is touted by some as sustaining high transaction throughput, catering to dApp developers and users seeking faster, cheaper blockchain solutions. 

Though it's not without headaches. 

Unlike Ethereum, which has maintained a relatively stable network, Solana has faced multiple instances of downtime and network outages that have impacted its reliability over the years.

Those interruptions have raised concerns among developers and users about Solana’s ability to consistently handle high volumes, suggesting that while the network’s speed and cost advantages are notable, its stability has oftentimes been a tradeoff.

In any case, structural developments make Solana an increasingly attractive platform for developers, who benefit from low operational costs and quick deployment times, Syncracy said.

Meanwhile, the next wave of growth for Solana could come from a potential ETF approval in the U.S., an outcome some market analysts see as plausible given SOL's status as the third-largest digital asset, excluding Tether.