© 2026 The DeFi Report. All Rights Reserved.
Hello readers,
In January ‘23, SOL traded at a 97% discount to ETH.
By July of last year, the gap had narrowed to an 83% discount.
Now. Here we are, almost a year later. The gap continues to compress as the market questions Ethereum’s scaling roadmap while assessing Solana’s potential to “bring the Nasdaq onchain.”
In past analyses, we’ve focused on high-level KPIs across fees, DEX volumes, stablecoin supply & volume, TVL, etc., to compare the two networks.
We’re switching it up in this week’s report to focus on Real Value Available to Token Holders.
Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment advice.
Let’s go.
Data: The DeFi Report, Dune
Real Value Available to Tokenholders/Stakers for Solana = Jito Tips (MEV) earned by validators and shared with stakers. It does not include new SOL issuance, base fees, priority fees, or MEV retained by searchers.
The $475m figure for Solana is net of Jito’s 6% fee applied to all validators running Jito’s tip router & block engine. If you’re holding SOL, you can stake to a trusted validator/LST, such as Helius (hSOL), that charges $0 commission to stakers. In this case, SOL stakers keep 94% of the MEV running through Jito (95% of Solana’s stake is running Jito).
Real Value Available to Tokenholders/Stakers for Ethereum = MEV + priority fees earned by validators and shared with stakers. It does not include new ETH issuance, base fees, blob fees, or the portion of MEV retained by searchers and block builders.
The $134m figure for Ethereum is net of the 10% fee charged by Lido, the most trusted liquid staking provider on Ethereum.
Ethereum has 6.6x the TVL as Solana and 10x the stablecoin supply that Solana has.
Yet Solana has done 3.6x Ethereum in terms of Real Value to Tokenholders YTD.
Why? Execution and velocity drive real value. That’s how you monetize TVL for validators and tokenholders.
Data: The DeFi Report, Dune
In TradFi, Nasdaq handles execution & velocity. The DTCC handles custody/settlement. Ethereum looks more and more like the DTCC (custody + settlement/accounting of L2 transactions). Base and other L2s look more and more like Nasdaq (handle execution/velocity). And Solana is looking more and more like a combination of the two.
Combining Nasdaq + DTCC into one solution means that SOL holders get 100% of the value derived from execution/velocity services, while ETH holders get roughly 10% (from L2s via burned ETH).
Ethereum has the assets. But it needs to get them moving onchain. This is starting to play out on L2s and should continue to grow. The question mark right now is whether ETH tokenholders will ultimately be able to capture that value — a problem that Solana does not have right now.
Aside from a few innovative LSTs on Sanctum, Solana validators are retaining 100% of the priority fees received from user transactions (not sharing them with stakers). Jito wants to change this. The DAO currently has a governance proposal that would update the tip router to include priority fees, in addition to the MEV that is currently routed and paid to stakers. Per Jito, this is expected to be implemented in the next few months.
Here’s what the numbers look like YTD if we were to add the priority fees ($372m, net of tip router fees):
Data: The DeFi Report, Dune
It’s currently unclear how eager validators will be to opt into sharing priority fees, but we wanted to add them here so that you have some perspective on how the numbers could change.
Below is what the above data translates to in terms of annualized real yield (in SOL & ETH):
Data: The DeFi Report, Dune
With Solana priority fees:
Data: The DeFi Report, Dune
Data: The DeFi Report, Dune
By staking assets, tokenholders receive newly issued supply/issuance (paid to incentivize validators/stakers to provide services). This is a key distinction for crypto networks vs companies, as shareholders of companies have no way of avoiding dilution.
Solana’s “issuance yield” = 7.3% based on actual network issuance through 5.6.25 (annualized). Ethereum’s “issuance yield” = 2.78%.
YTD, Solana has issued 9.4m tokens — which are paid to the SOL staked within validators on the network (average stake of 385m YTD through 5.6.25). Ethereum has issued 329,380 ETH YTD to the 34.3 million tokens staked within validators on the network.
Ethereum’s “issuance yield” has already normalized as the network has very low inflation (.64% annualized, based on actuals year to date). Solana’s “issuance yield” will continue to drop, as the network inflation rate is currently 4.5%, falling 15% per year until it reaches a terminal rate of 1.5%.
Data: The DeFi Report, Dune
Memecoins are driving more than half of Solana DEX volumes (51% over the last few months). SOL/USD makes up about 35% of DEX volumes, with stablecoins, LSTs, and other assets making up the remaining 14%.
Is this a problem?
Yes and no.
It’s clear that speculation/gambling is one of the strongest use cases in crypto. Solana has found product/market fit here by simply offering a better user experience.
We don’t see this going away anytime soon.
Furthermore, memecoin trading is stress testing the system and providing invaluable feedback to infrastructure providers.
Memes today. Stocks, bonds, currencies, and private assets tomorrow?
That’s ultimately the prize Solana is playing for.
If you’re curious, between 1-2% of DEX volumes on Ethereum L1 are memecoins today. Stablecoin swaps are about half the volume, with ETH/Stablecoin swaps and other project tokens accounting for about 20% of the volume, respectively.
Roughly 50% of DEX volumes on Base come from memes today, with the vast majority coming from new memes.
Some crypto analysts believe that MEV (the value derived from users paying for time-sensitive transactions) is the only long-term value that will persist for L1s, as base fees compress/become commoditized over time.
We disagree with that view, but we do think MEV will drive most of the economics. Therefore, it’s essential to lay out the differences in how MEV works on Solana vs Ethereum, as well as the impact that L2s could have.
Ethereum has a mempool where all transactions go before they are ordered and submitted to validators.
This is where the MEV market takes place. The key players:
Searchers: These are bots that use machine learning algorithms to identify profitable opportunities within the mempool.
Block Builders: Block builders build the blocks. Said another way, they order transactions in blocks, accepting “bribes” from searchers in the process.
Validators: Validators approve the blocks once they are submitted by block builders (with tips).
The workflow:
Users submit transactions —> Ethereum Mempool —> “Searchers” (bots) identify value (arbitrage, sandwich tx, liquidations) —> submit additional transactions to Block Builders (w/tips) —> Block Builders bundle transactions —> Submit to Validators (w/tips) —>Validators approve transactions, keeping most of the tip (with the Block Builder and Searcher keeping a portion).
The big unknown for Ethereum: what happens to MEV if the majority of transaction volume moves to L2, as anticipated?
We think MEV will go to L2s via priority fees. Below, we can see that 85% of Base’s fees come from priority fees.
Data: The DeFi Report, Dune
Solana doesn’t have a mempool. Instead, it has specialized validator clients like Jito that have implemented a form of a rolling, private mempool.
How it works:
Jito’s block engine creates a very short-lived (about 200 milliseconds) window where searchers can submit transaction bundles for inclusion in the next block. This rolling mempool is not public but is accessible to searchers who connect to Jito’s infrastructure, allowing them to see and act on potential arbitrage opportunities within that tight window.
Searchers typically monitor onchain state directly (e.g., order books, liquidity pools) by running their own full nodes or RPC endpoints. They detect arbitrage opportunities by watching for state changes caused by already-confirmed transactions, not by seeing pending transactions in a mempool.
When a profitable opportunity arises (such as a price imbalance across DEXs), bots rapidly construct and submit their own transactions or bundles to the next block leader (often via Jito or similar relays), in hopes of capturing the opportunity before anyone else.
Today, roughly 50% of arbitrage MEV is running through Jito (value that is shared with stakers via the tip router):
Data: sandwiched.me
If you’re investing in these networks, you need to have a view on how MEV can accrue to you as a tokenholder via staking.
We think SOL holders are currently in a better position to capture MEV (and possibly priority fees) when compared to ETH holders.
Should SOL be trading at a 65% discount to ETH (63.5% fully diluted)?
From a fundamentals perspective, absolutely not. The discount is too steep — even with ETH’s superior network effects, decentralization, lindy, assets secured, etc.
Our conclusion is that the market is currently overvaluing ETH relative to SOL based on its network effects and TVL.
The big narrative for ETH is that it will be the home for trillions of tokenized assets across equities, bonds, currencies/stablecoins, private assets, etc.
It may play out this way.
But ultimately, investors need to focus on how ETH is able to capture real value from those assets.
Why?
Because investors have a choice. If another chain is able to consistently return more value to tokenholders, we should anticipate that more capital will flow to that asset over the long run.
As Benjamin Graham used to say:
“In the short run, the market is a voting machine. But in the long run, it’s a weighing machine.”
One way that ETH can potentially catch up is via re-staking & blob fee scaling. With exciting new L2s coming to market, such as MegaETH (which uses EigenLayer for DA), ETH holders can potentially capture additional real value from these networks via re-staked ETH.
We’ll have more analysis to come in these areas.
But let’s be abundantly clear:
Crypto assets rarely trade on fundamentals today.
As much as we believe it will happen, it’s just not the case right now.
Narratives, momentum, storytelling, social presence, and liquidity conditions still tend to be what moves the markets.
Of course, ETH has been on the wrong end of the narrative game for the last few years.
But it feels like things are turning around.
A 20% move in a single day for a $220b + asset doesn’t hurt.
Remember: crypto markets are extremely reflexive. Price —> narratives —> fundamentals.
We’ll see if the recent flurry is just the beginning of a larger move.
Data: The DeFi Report
Thanks for reading.
Take a Report.
And Stay Curious.
Disclaimer: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.