Here's 1 More Big Reason to Buy Solana Instead of Ethereum in 2025

Key Points

• Blockchains often have one or more decentralized crypto exchanges.

• The trading volume on those exchanges is an indicator of the chain's usage intensity.

• Solana's exchanges are seeing more usage than Ethereum's.

• 10 stocks we like better than Solana ›

On the practical yardstick of activity, Solana (CRYPTO: SOL) is outworking Ethereum (CRYPTO: ETH) by a mile. That suggests it's going to grow faster.

Here's what's going on and why it means you should probably opt to invest in Solana rather than its larger cousin.

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Market caps don't explain this usage gap

As you may know, decentralized finance (DeFi) is the cluster of apps that let people swap, lend, and issue assets on blockchains without centralized intermediaries. One clean way to track where DeFi is truly happening is to look at total trading volume of a chain's decentralized exchanges (DEXes) over the course of a year, because without interacting with a DEX, new users probably have no way to procure the tokens they need to actually interact with the decentralized apps (dApps).

On that metric, Solana is at the top of the crypto sector's leaderboard during the past 12 months, with roughly $1.4 trillion in DEX trading activity, while Ethereum sits near $699 billion. And that's the one big reason to buy Solana -- but let's dig deeper and put these figures into context.

The main piece of context that matters here is that Ethereum's market cap is vastly larger than Solana's. As of Sept. 24, Ethereum's market cap is about $506 billion, versus roughly $117 billion for Solana. In other words, Solana handled about double the DEX activity of Ethereum during the past year, while being only about 23% of Ethereum's size by market cap today. That means the market is certainly not overvaluing Solana; the coin might actually be undervalued relative to Ethereum, which is up 71% in the same three-month period.

To be fair, Ethereum's scaling strategy is modular by design, which is to say that its underperformance on this metric is somewhat structural. Under that strategy, traffic is shunted to its Layer-2 (L2) chains so as to prevent the base layer from becoming overcrowded.

A great deal of activity has migrated to those L2s, and the volumes they carry are significant, given that overwhelmingly their market caps are less than 1% of Ethereum's. But even with that context, the comparison still favors Solana today; not all of Ethereum's L2's actually add value to the main chain, so more activity on the L2s does not necessarily boost the Ethereum's price. And having a fractured ecosystem spread across multiple associated chains is a bit of a headache for investors and users alike, to say the least.

Furthermore, investors should not ignore a persistent ease of use advantage on the venue where the experience is simplest. Getting DEX transactions settled quickly and cheaply (and without futzing with any L2s) is one of Solana's strengths, and it's also one of Ethereum's weaknesses, as its gas (user) fees tend to be noticeably high and its transaction times much slower. So there's both an easier onboarding experience, and a much snappier user experience for newly onboarded Solana users. And if history is a guide, sustained usage tends to precede value.

Structural edges will keep compounding value

Where does Solana go from here? In a word, onward. Its price is up by 41% during the past 12 months, and it will likely keep running.

App developers and liquidity providers, not to mention financial institutions, notice when a platform gains traction. They also notice that when they interact with Solana, their marginal costs for transactions rounds to zero, as do consumers who would never pay a few dollars to move or swap a small balance. And so it makes sense that all of these actors will continue to do things like develop apps on the blockchain, offer liquidity pools to generate a yield, and move their assets to the chain to capture some of the ongoing activity. That will create more demand for Solana, and thus sustain its price.

Of course, Solana and Ethereum can both succeed, and both probably will. To be perfectly clear, they're both worth investing in today.

In comparison to Ethereum as an investment, however, Solana now offers a distinct, usage-led upside case in 2025, which, when paired with the other elements of its investment thesis and the tailwinds it's catching right now, make it a more attractive purchase.

Should you invest $1,000 in Solana right now?

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Alex Carchidi has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Ethereum and Solana. The Motley Fool has a disclosure policy.