Unprecedented Victory: Solana (SOL) Surpasses Ethereum, Yet a Twist Awaits

• On May 12, Solana surpassed Ethereum in generating Total Economic Value (TEV) for the first time in history.
• According to Blockworks Research, Solana generated $2,248,681 in TEV, outpacing Ethereum’s $1,977,416.
• However, critics argue that comparing Solana’s TEV with Ethereum’s without considering layer-2 (L2) solutions is misleading.

Solana outpaces Ethereum in generating Total Economic Value (TEV) for the first time, sparking debates about the validity of such comparisons without considering layer-2 solutions.

Breaking down the data

As reported by Blockworks Research, Solana generated $2,248,681 in TEV on May 12, surpassing Ethereum’s $1,977,416. TEV, which combines transaction fees and miner/extractor value (MEV), is often used to analyze the utility and adoption of a blockchain network. Chris Burniske, the former Ark Invest analyst, commented on the development, stating that we should monitor L1s that are maintaining their annual expansion in the form of TEV. Higher TEV can indicate greater usage and demand, which can, in turn, provide more flexibility in the economic policies of the network.

There’s a problem

Despite Solana’s achievement, the comparison of its TEV with Ethereum’s has sparked a debate. Critics argue that such comparisons are misleading if layer-2 (L2) solutions are not taken into account. L2 solutions, built on top of Ethereum to enhance scalability and reduce fees, offload some of the activity from the main Ethereum blockchain (L1), while remaining a crucial part of it. As one commentator pointed out, “Since some ETH activity has moved to L2s, wouldn’t we include that? Come on Chris, this is just disingenuous if you don’t take L2s into account.”

TEV comparisons across blockchains

Despite the criticism, comparing TEV across blockchains remains valuable. As Burniske explained, each L2 operates in its own blockspace environment, and TEV comparisons are typically made on an L1-to-L1 basis. However, some may disagree with such an approach and consider L2s an inseparable part of larger ecosystems like Ethereum, which has struggled due to high fees in the past. For now, Ethereum fees sometimes drop even below Tron’s.

Conclusion

In conclusion, while Solana’s surpassing of Ethereum in terms of TEV is a noteworthy development, the debate surrounding the validity of such comparisons without considering L2 solutions highlights the complexities of measuring blockchain network utility and adoption. As the blockchain space continues to evolve, it will be interesting to see how these discussions shape the understanding and evaluation of TEV across different networks.