Solana could lag Ethereum as meme coin activity dips

• Solana’s current funding rate sits at -0.0002%, signalling short pressure.
• Solana DEX volumes fell behind Ethereum earlier this year.
• Accumulation of SOL suggests long-term investor confidence remains.

Standard Chartered has cautioned that Solana (SOL) could underperform Ethereum (ETH) due to fading meme coin activity, a key driver of Solana’s on-chain volume in recent quarters.

While Solana has proven its technical capabilities, particularly during the recent meme coin trading boom—the bank now sees a risk of underutilisation as seasonal trends shift.

According to the bank’s Head of Digital Assets Research, Geoff Kendrick, Ethereum’s broader adoption and institutional partnerships place it in a stronger position for sustained growth.

Ethereum gains from broader use cases

Solana has often been positioned as a faster and cheaper alternative to Ethereum, with the ability to handle high transaction volumes at low cost.

However, Standard Chartered points out that much of this activity has been driven by short-term trading of meme coins, a sector known for its volatility and limited utility.

With meme coin enthusiasm cooling off in 2025, Kendrick projects a possible usage gap for Solana before other applications, such as decentralised finance platforms, gaming projects, or social media integrations, gain critical mass.

The bank says Ethereum’s advantage lies in its diversified user base, which includes enterprise-level applications, financial products, and long-term smart contract development.

Blockchain analytics also supports this view. Earlier this year, Ethereum overtook Solana in decentralised exchange (DEX) trading volumes after a slump in trading on Raydium (RAY) and Pump.fun, two of Solana’s most active meme coin platforms.

That shift underlined Ethereum’s dominance across multiple sub-sectors of the blockchain space.

Market sentiment reflects short-term Solana risks

Investors appear to be reacting to these signals. In February, traders began trimming exposure to Solana-based assets due to uncertainty over the future of meme coin projects and delays in scaling up major Solana-native protocols.

Standard Chartered says these concerns are now being priced into market forecasts, particularly in terms of revenue from transaction fees and new user onboarding.

One key indicator is Solana’s funding rate. According to blockchain data firm Glassnode, Solana currently has a negative funding rate of -0.0002%, the only such figure among the top 10 cryptocurrencies by market capitalisation, excluding stablecoins.

A negative funding rate means short sellers are paying fees to hold bearish positions, which typically indicates mounting downward pressure on price.

However, a negative funding rate can sometimes be a contrarian indicator. Traders may be expecting a short squeeze, where sudden upward price moves force shorts to buy back their positions, potentially creating a sharp rally.

BeInCrypto reports that the accumulation of SOL by institutional players in May suggests that long-term investors may still see value in Solana, even if near-term performance lags Ethereum.

Analysts say Ethereum remains the dominant layer-1

While Solana has demonstrated rapid growth and robust technical infrastructure, analysts from IntoTheBlock believe the network still has significant ground to cover before challenging Ethereum’s dominance.

The research group said that although Solana may continue to grow and target niche applications, surpassing Ethereum remains a long-term goal rather than an imminent milestone.

Ethereum’s integration with traditional finance, widespread developer support, and upgrades like the shift to proof-of-stake have helped entrench its position as the go-to blockchain for decentralised applications.

Until Solana’s next wave of real-world use cases gains momentum, Standard Chartered believes the network’s price and on-chain activity may continue to trail Ethereum.

As the market matures, both blockchains may find space for growth—but in the short term, Ethereum’s ecosystem breadth and investor confidence give it the edge, according to the bank’s latest analysis.