Solana Surpasses Ethereum with Bitcoin Liquidity

What is Total Value Locked (TVL) and Why Does It Matter?

The TVL represents the total value of digital assets that are staked or locked within a blockchain’s smart contracts. It serves as an important metric for evaluating the liquidity and adoption of decentralized applications (dApps) and protocols on a blockchain. Solana’s rise in TVL highlights its growing importance in the crypto ecosystem.

Key Highlights of Solana’s Q4 2024 Performance

Several factors contributed to Solana’s TVL surge, including the dominance of decentralized exchange (DEX) Raydium:

• Raydium’s Growth: Raydium, Solana’s largest DEX, gained 86% in TVL quarter-over-quarter, reaching a market share of 24% by the end of 2024. This growth was driven by a rise in memecoin and AI-related crypto trading.
• Institutional Interest: Despite the crypto market cooling, Solana continues to outperform Ethereum in revenue generation, according to DefiLlama. Solana’s application revenues are currently ten times greater than Ethereum’s as of February 2025.
• Bitcoin Liquidity Shift: Bitcoin’s migration to Solana through platforms like Zeus Network is expected to increase Solana’s TVL, potentially surpassing Ethereum in the near future.

Solana’s Institutional Appeal

Solana’s unique features, such as its scalability and speed, are attracting both institutional and retail users:

• Scalability: Solana can handle up to 65,000 transactions per second (TPS), making it an ideal blockchain for high-volume applications like DeFi and tokenization.
• Low Transaction Costs: Solana’s low transaction fees (around $0.02) and its reliable security features make it a viable solution for institutional use, especially for financial services and asset tokenization.
• Institutional Adoption: Major financial institutions such as Franklin Templeton, BlackRock, and Société Générale are integrating Solana into their operations, thanks to its speed and cost-efficiency.

Solana’s Surge in Wallets and Transactions

The growth of Solana’s ecosystem is further evidenced by the increase in the number of active wallets and transactions:

• Wallet Growth: Solana’s active wallets grew from around 1 million in May 2024 to over 4 million in February 2025, with occasional spikes to 8 million.
• Transaction Volume: Solana’s transactions have surged, with a record 400 million transactions processed and a peak real TPS of 4,000 in 2024.

The Role of Zeus Network and Bitcoin Liquidity

Zeus Network, a flagship communication layer for Solana and Bitcoin, has introduced a novel way to bring Bitcoin liquidity onto Solana. The APOLLO dApp, which launched its final testnet in August 2024, has already engaged over 30,000 unique addresses and is facilitating cross-chain interactions:

• Bitcoin to Solana Integration: Users can now seamlessly connect Bitcoin and Solana wallets, enabling Bitcoin liquidity to flow onto Solana’s blockchain.
• Cross-Chain Activity: With over 581 cross-chain interactions valued at $23.75 million, Zeus Network is a game-changer for bringing Bitcoin assets into the Solana ecosystem.

Solana’s Proof of History vs. Ethereum’s Proof of Stake

One of Solana’s key advantages over Ethereum is its use of the Proof of History (PoH) consensus mechanism. This protocol allows Solana to achieve high throughput without relying on sidechains or second layers:

• Transaction Speed: Solana can process 65,000 TPS, far surpassing Ethereum’s 15-45 TPS, and achieves one block every 2.34 seconds.
• Efficiency: PoH eliminates the need for validators to agree on the time of transactions, speeding up the entire process and reducing delays.

Firedancer: A Major Milestone for Solana

In 2025, Solana will undergo a major network upgrade with Firedancer, its fourth validator developed by Jump Trading. Firedancer will enhance Solana’s transaction processing capacity, enabling it to handle over 1 million transactions per second. This improvement, along with increased security, will solidify Solana’s place as a leading blockchain for high-speed, high-volume operations.

Lower Fees and Optimized Smart Contracts

Solana’s low fees and highly optimized smart contracts give it an edge over Ethereum, especially for developers and users involved in frequent transactions:

• Transaction Costs: While Ethereum’s fees can exceed $1 per transaction, Solana’s fees are around $0.02, making it more attractive for dApp creators and traders.
• Smart Contract Language: Solana’s smart contract platform, Sealevel, supports parallel processing and uses Rust, a language known for its high performance and memory safety. This gives Solana a distinct advantage over Ethereum, which relies on Solidity.

Conclusion: Solana’s Path to Dominance

Solana’s innovative technology, institutional adoption, low fees, and ability to integrate Bitcoin liquidity give it the potential to surpass Ethereum in TVL and adoption. With ongoing improvements such as the Firedancer upgrade and continued institutional interest, Solana is poised for continued growth and success in the blockchain space.