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In a remarkable shift, Solana has overtaken Ethereum in staking market capitalization, raising questions about the sustainability of this trend.
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As Solana garners attention with an impressive staking yield, concerns arise regarding its security model compared to Ethereum’s established mechanisms.
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“Solana has close to zero economic security at the moment,” warned crypto expert Dankrad Feist, highlighting the ongoing debates about Solana’s staking practices.
Solana surpasses Ethereum in staking market capitalization, raising concerns about security while attracting investor interest in high yields.
Solana Outpaces Ethereum As High Staking Yields Prove Appealing
Recent data reveals that 64.86% of Solana’s total supply is staked, delivering an impressive annual percentage yield (APY) of 8.31%. In contrast, Ethereum has only 28.18% of its supply staked, with an APY of 2.98%.
This disparity highlights Solana’s growing appeal for investors seeking passive income through staking. Staking market capitalization is calculated by multiplying the total number of staked tokens by their current price. With SOL priced at $138.91 as of this writing, Solana has officially surpassed Ethereum in this metric.
However, Solana’s high staking ratio has sparked some controversy. Critics, such as Dankrad Feist on X, argue that Solana’s lack of a slashing mechanism (or penalties for validator violations) undermines the economic security of its staking model. With its slashing mechanism, Ethereum offers greater security despite its lower staking ratio.
“It’s very ironic to call it ‘staking’ when there is no slashing. What’s at stake? Solana has close to zero economic security at the moment,” Dankrad Feist shared.
Increased Whale Activity Signals Caution
Meanwhile, recent moves by “whales” (large investors) have further fueled interest in Solana. On April 20, 2025, a whale unstaked 37,803 SOL (worth $5.26 million). Similarly, Galaxy Digital withdrew 606,000 SOL from exchanges over four days (April 15–19, 2025), concluding with 462,000 SOL.
Additionally, on April 17, 2025, a newly created wallet withdrew approximately $5.15 million worth of SOL from the Binance exchange. In the same tone, Binance whales withdrew over 370,000 SOL tokens valued at $52.78 million.
While some whales withdrew their SOL holdings, other large holders accumulated. Janover, a US-listed company, increased its Solana holdings to 163,651.7 SOL (worth $21.2 million) and partnered with Kraken exchange for staking on April 16, 2025.
These actions signal diverging plays from institutional investors and whales as the Solana price fluctuates around key levels.
SOL Price Analysis: Opportunities and Challenges
As of this writing, SOL was trading at $140.49, up 3.53% in the past 24 hours. Analysts highlight $129 as crucial support for the Solana price, with $144 presenting the key roadblock to overcome before Solana’s upside potential can be realized. Breaking above the aforementioned roadblock could propel SOL toward new highs.
Conversely, dropping below the $129 support level could trigger increased selling pressure. Nevertheless, SOL has shown a remarkable recovery, with a 14.34% increase over the past week.
Another factor to consider is the ongoing development of the Solana ecosystem. Key innovations include the QUIC data transfer protocol, the combination of Proof-of-History (PoH) and Proof-of-Stake (PoS), and the diversification of validator clients.
With these developments, Solana continues to enhance its performance and decentralization. Additionally, the launch of the Solang compiler, compatible with Ethereum’s Solidity, has attracted developers from the Ethereum ecosystem.
COINOTAG also reported on Solana’s upcoming community conference, otherwise termed Solana Breakpoint. Key announcements from this event could provide further tailwinds for the SOL price.
Nevertheless, despite surpassing Ethereum in staking market capitalization, Solana faces significant challenges. Ethereum benefits from a more mature DeFi ecosystem, greater institutional trust, and enhanced security through its slashing mechanism.
To some, Ethereum’s lower staking ratio (28%) may be a deliberate strategy to reduce network pressure and ensure liquidity for DeFi applications.
In contrast, Solana’s high staking ratio (65%) could limit liquidity within its DeFi ecosystem. This raises the question of whether Solana can strike a balance between staking and the growth of its decentralized applications.
As Solana continues challenging Ethereum’s dominance, the crypto community remains divided. Is Solana’s rise a sustainable breakthrough, or just another wave of hype?
Conclusion
The cryptocurrency market is currently witnessing a pivotal moment as Solana’s staking surge poses both opportunities and challenges. While its impressive staking yield has drawn considerable interest, issues surrounding its security framework and liquidity remain concerns. As the crypto landscape evolves, only time will tell if Solana can maintain its momentum and provide sustainable growth amid its fierce rivalry with Ethereum.
