Franklin Templeton: Solana’s DeFi Boom Is the Biggest Threat to Ethereum’s Reign Yet
March 6, 2025
Key Takeaways
- Ethereum’s dominance in DeFi faces growing pressure from Solana’s expanding ecosystem.
- Solana’s DEX volumes surpassed its rivals in January, signaling a potential market shift.
- A Franklin Templeton report suggests Solana is undervalued despite higher growth rates.
- Ethereum remains the market leader but must adapt as competition intensifies.
Ethereum (ETH) has long been the backbone of decentralized finance (DeFi), but in 2025, its reign is facing an undeniable challenge from Solana (SOL).
A new Franklin Templeton report highlights Solana’s growing influence, emphasizing that while it may not yet pose an existential threat to Ethereum, its rise is impossible to ignore.
Solana Gains Ground in DeFi
Ethereum has been the industry standard for DeFi, boasting the highest total value locked (TVL) and leading DEX volumes.
Its ecosystem has facilitated up to $600 billion in monthly trading volume and secured over $120 billion in TVL.
However, for the first time, Ethereum’s dominance is facing sustained pressure.
Solana’s high-speed, low-cost transactions have attracted users and developers, leading to a surge in DeFi adoption.
In January, Solana DEXs processed more volume than all Ethereum Virtual Machine (EVM)-based DEXs combined, an unprecedented milestone.
While Ethereum remains the largest smart contract platform by market capitalization, Solana’s DeFi growth is forcing analysts to reconsider long-held assumptions about the sector’s future.
The SVM vs. EVM Debate Heats Up
The rise of Solana has reignited debates about the superiority of its virtual machine SVM versus Ethereum’s EVM.
Historically, Ethereum has been the preferred platform for DeFi applications due to its infrastructure and network effects.
However, Solana’s growing DeFi market share suggests a shift in developer and user preferences.
The Franklin Templeton report suggests that “DeFi may be entering an era of Solana Virtual Machine (SVM) dominance, shifting away from the historical reign of EVM-based DeFi.”
Solana’s DeFi protocols also trade at lower valuation multiples than their counterparts despite significantly higher growth rates.
The report notes that this valuation asymmetry could indicate that Solana’s DeFi sector is undervalued relative to its trajectory.
Ethereum’s Reign Is Secure—for Now
Despite Solana’s rapid rise, Ethereum still holds key advantages, including a larger developer base, institutional adoption, and deep liquidity.
Many industry experts argue that Solana is not yet positioned to dethrone Ethereum but acknowledge that it is becoming an increasingly formidable competitor.
As Solana’s DeFi ecosystem matures, its protocols may begin to mirror Ethereum’s valuation, reinforcing its status as a major player.
While Ethereum remains the dominant force in DeFi, the market is evolving—making it clear that Solana is no longer just another alternative but a genuine challenger.
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