Standard Chartered Report: Is Solana Becoming a "Meme Chain" and Facing Growth Challenges?

Original Title: Solana may be a memecoin 'one-trick pony' --- Standard Chartered

Original Author: Adrian Zmudzinski

Original Translation: Tim, PANews

According to a recent report released by Standard Chartered, the Layer1 blockchain Solana may be evolving into a "one-trick pony" focused solely on generating and trading memecoins.

According to the research report dated May 27, Solana dominates the public chain space with high transaction volume and low transaction costs, thanks to its design architecture that enables fast and low-cost transaction confirmations. This technological advantage has led to an unexpected consequence: so far, it has primarily concentrated on memecoin trading, which accounts for a significant portion of activity on Solana (measured by "GDP," or application revenue).

Standard Chartered stated that the memecoin craze has put Solana's scalability to the test, but the volatility and speculative nature of such assets also bring drawbacks. As memecoin trading volume declines, the bank warned that Solana may struggle to maintain its growth momentum.

The Memecoin Frenzy Has Passed Its Peak

The report pointed out that the memecoin frenzy based on Solana has passed its peak, and the decline in usage combined with "cheap" transactions is not an ideal combination. The bank suggested that Solana should expand into other areas that require a large number of low-cost, fast transaction processing, such as financial settlement, decentralized cloud computing, or real-time data exchange, which align well with the high throughput characteristics of its blockchain.

Solana Decentralized Exchange Trading Volume. Source: Standard Chartered

According to the report, these areas may include high-throughput financial applications and traditional consumer applications like social media. However, the bank noted that scaling such applications may take several years, which could have serious consequences for Solana. If progress falls short of expectations, its market competitiveness, developer ecosystem, and platform reputation could suffer significant damage, and its valuation may face considerable downward pressure.

"Therefore, we expect Solana's performance to lag behind Ethereum in the next two to three years, before catching up later, at least in terms of actual value."

Standard Chartered's Cryptocurrency Target Price. Source: Standard Chartered

Solana's Advantages Are Gradually Disappearing

For a long time, Solana has positioned itself as a fast, low-cost L1 public chain that supports smart contracts, directly competing with Ethereum. However, this advantage may be gradually weakening.

Average Transaction Fees of Solana and Arbitrum. Source: Standard Chartered

Since the Dencun network upgrade in March 2024, Ethereum's second-layer platform has surpassed Solana in terms of average transaction costs. This shift puts pressure on Solana's value proposition as "the cheapest high-throughput blockchain." Standard Chartered pointed out that Ethereum has achieved more efficient scaling by modularizing data availability, execution, and consensus, maintaining decentralization while enhancing scalability: "The modular approach allows Ethereum to scale transaction processing (after the Dencun upgrade) at low costs while retaining the security advantages of a highly decentralized mainnet."