Solana vs. Ethereum in DeFi: Franklin Templeton Breaks Down the Competition
Franklin Templeton, a global asset management firm, has analyzed the growing competition between Solana and Ethereum in a new report. While Ethereum remains the dominant force in decentralized finance (DeFi), Solana’s rapid rise is starting to challenge its position.
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According to the report, Solana-based decentralized protocols are gaining traction due to their popularity and high yields. However, despite this momentum, the valuation of many Solana DeFi projects remains significantly lower compared to their Ethereum counterparts.
DeFi on Solana and Ethereum: A Closer Look
Franklin Templeton highlights the crucial role of DeFi protocols in providing users with financial products and services. As of January 31, 2025, the monthly trading volume on DeFi platforms reached $600 billion, with the Total Value Locked (TVL) across various blockchains surpassing $120 billion.
Since its inception, Ethereum has led the DeFi sector with the highest activity levels and the deepest liquidity. But for the first time, its dominance is being seriously challenged.
Looking at the market, you’ll notice some shifts.
Franklin Templeton reports that in January, Solana's decentralized exchanges (DEXs) surpassed the combined trading volume of Ethereum and all other Ethereum Virtual Machine (EVM)-based DEXs.
Solana’s Takeover? What’s Next for DeFi and Ethereum
Franklin Templeton highlights two major trends shaping the DeFi space:
- DeFi activity is increasingly shifting toward Solana, signaling a potential new era of dominance.
- Ethereum’s financial activity is moving off mainnet and onto Layer-2 (L2) solutions or EVM-compatible Layer-1 chains, making Ethereum’s ecosystem more modular.
So, what does this mean? Solana’s blue-chip DeFi protocols, including Jito, Raydium, Jupiter, Orca, and Kamino, are in a prime position for major growth. These are the largest DeFi projects on Solana by Total Value Locked (TVL), excluding restaking protocols. As more transactions move on-chain, their influence will likely expand.
According to Franklin Templeton’s Solana vs. Ethereum comparison, there’s a noticeable valuation asymmetry between the two ecosystems.
One reason? Concerns over Solana’s stability and security. The network faced multiple outages in the past, raising reliability questions. However, it’s now been over a year since Solana has had a major issue, and the protocol continues to roll out updates to improve stability.
Franklin Templeton suggests that as these concerns fade, Solana’s DeFi protocols may rise in valuation to align more closely with comparable Ethereum projects.
The Solana vs Ethereum debate isn’t just about valuation – it also involves network capacity and ecosystem diversity.
As of now, Ethereum leads in TVL with over $50 billion, while Solana holds second place with $7.4 billion, according to DeFiLlama.
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