Solana Overtakes Ethereum in Economic Value Amid Memecoin Surge

• Solana reaches a record in real economic value.
• Memecoin activity pushed metric over Ethereum. 
• REV is key for Solana’s security and decentralization. 

Solana has seen significant growth this year, driven largely by the explosion of memecoins on its chain. As memecoin activity is picking up again, Solana reached an all-time high in a key metric. 

The memecoin trading volume is pushing up Solana’s fees, impacting metrics. Notably, the real economic value of the Solana Network reached its highest level ever and even surpassed Ethereum. 

Solana Surpasses Ethereum in Real Economic Value

Thanks to surging memecoin activity, Solana has overtaken Ethereum in a key metric. On Thursday, October 24, Solana achieved a record $11.09 million in real economic value. This figure puts it above Ethereum, which used to lead in terms of revenue. 

Real Economic Value (REV) combines transaction fees and Maximum Extractable Value (MEV) tips. These fees are primary sources of revenue for the chain and its validators, helping to secure the network. Since October 19, Solana’s REV has outperformed that of Ethereum. 

The main driver of this growth is the growing demand for Jito tips and priority fees. As traffic rises thanks to memecoin trading on platforms like Pump.fun, traders are increasingly competing for priority transactions. Validators can choose to prioritize the transactions for those traders that pay extra. 

Why REV is Key for Solana

Network revenue is key for Solana , and has a crucial impact for both its decentralization and security. Notably, Solana’s validators have very high fixed operating costs, due to the expensive equipment required to run the network. 

Smaller validators, in particular, are extremely dependent on REV. Because validators get their income proportional to the amount of staked SOL, smaller validators always run the risk of going under when fees go down. 

This dependence was highlighted in September, when slowing memecoin traffic caused falling revenues. This ignited major concerns for Solana, including the risk of worsening centralization. 

On the Flipside

• Memecoins are among the most volatile investments in crypto. Solana’s reliance on this industry can be a risk for its network. 
• Solana became a popular platform for celebrities to launch their own tokens. However, these have seen a dismal performance. For instance, the 30 celebrity memecoins launched in June were down an average of 94% in just a month. 

Why This Matters

The record REV for Solana is a key milestone, as it plays a crucial role in maintaining network security and decentralization. 

Read more about Solana’s growth: 
Solana TVL Hits 2-Year High: What’s Driving the Growth?

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