By Key Points
- Solana Staking Market Cap Flips Ethereum in $53.9B Surge
- Over 505K wallets are staking SOL at an 8.31% annual yield
- Experts argue high staking returns hurt Solana’s DeFi growth
- Ethereum still leads in validator count and DeFi dominance
Solana briefly passed Ethereum in terms of staking market cap, hitting a massive $53.9 billion in staked SOL. This surprising milestone triggered a heated discussion in the crypto space—was this a bullish signal for Solana or a red flag?
As of April 20, more than 505,000 unique wallets are staking SOL, enjoying an 8.31% annualized return, according to blockchain analytics. In comparison, Ethereum has $53.93 billion in staked ETH, offering only 2.98% annual returns across 34.7 million tokens.
SOL just flipped ETH in “staking market cap”. pic.twitter.com/bhbrPFsoFB
— Alex Svanevik 🐧 (@ASvanevik) April 20, 2025
A key factor behind this flippening has been SOL’s powerful price momentum. Over the last two years, the SOL/ETH ratio has jumped nearly 10x, from 0.0088 to 0.0866, based on data from CoinGecko.
But the real question remains—does this mark long-term strength for Solana or a temporary imbalance?
Solana having 65% of it’s marketcap staked means there’s no other use of it’s token, it’s actually a bearish.
Staking SOL isn’t a choice, it’s the default, because of poor demand elsewhere.
ETH is useful onchain for many things, especially DeFi.
Staking ETH is not the most… pic.twitter.com/wR25fIhtZ3
— JC (@delzennejc) April 20, 2025
High Staking Rewards Are Drawing Users Away from DeFi
Despite this massive staked value, some industry voices suggest that high staking rewards may actually be hurting Solana’s broader ecosystem.
“Solana having 65% of its market cap staked means there’s no other use of its token. It’s actually bearish,” said JC, a developer at Builda Protocol, on X.
Ever wondered why rates on Solana DeFi are usually low? ⬇️ The ecosystem might be fighting an uphill battle… ⚔️
With staking rewards setting a high bar for returns, @TusharJain_ argues a lower inflation rate would’ve made DeFi more attractive on SOL. pic.twitter.com/dqPUOAlccA
— Laura Shin (@laurashin) March 17, 2025
Why? The logic is straightforward: If you can earn 8.31% just by staking, why take risks in DeFi protocols that offer less?
This is impacting Solana’s decentralized finance scene. The network’s DeFi total value locked (TVL) is just $8.85 billion, while Ethereum towers at $50.4 billion, per DeFiLlama. And in liquid staking, Ethereum leads again, with $21.5 billion worth of stETH, compared to Solana’s $7.22 billion in liquid staked SOL.
Love ETH & SOL, but Solana’s staking market cap is a tree hiding Ethereum’s forest: 28% staking ratio vs. 65%, 1.07M validators vs. 1,642, validator diversity, slashing, 0.35% inflation vs. 4.7%, mature DeFi, institutional trust (RWA).
— dapriddle.eth (@dapriddle) April 20, 2025
Tushar Jain of Multicoin Capital highlighted the issue:
“It doesn’t make sense for you to provide liquidity on a SOL/USDC AMM when that might earn you 5% but staking earns you 7%.”
Solana’s challenge mirrors what Aptos is facing with reduced staking rewards, as both ecosystems struggle to balance attractive yields with broader ecosystem growth.
Slashing will hit mainnet this year
— Kyle Samani (@KyleSamani) April 20, 2025
Even with massive momentum across its ecosystem—such as the surging popularity of Solana meme coins and growing demand in NFTs—the platform must address whether staking is pulling too much focus from other use cases.
Solana vs Ethereum: Security, Validators, and Decentralization
While Solana might have briefly flipped Ethereum in staking market cap, Ethereum still leads in security and decentralization.
Up to the simd process. I am pushing for correlated slashing. Something like:
(faulty stake for the epoch – median network staked validator)^2
— toly 🇺🇸 (@aeyakovenko) April 20, 2025
Ethereum is secured by 1.06 million validators, while Solana has just 1,243. This validator disparity fuels concerns about Solana’s true network strength.
Ethereum researcher Dankrad Feist didn’t mince words:
“It’s very ironic to call it ‘staking’ when there is no slashing. What’s at stake?”
In Ethereum, slashing penalizes validators for bad behavior. In Solana, slashing is only possible by restarting the entire network—making it practically unused.
Up to the simd process. I am pushing for correlated slashing. Something like:
(faulty stake for the epoch – median network staked validator)^2
— toly 🇺🇸 (@aeyakovenko) April 20, 2025
Solana Labs CEO Anatoly Yakovenko recently said they are working on a “correlated slashing” mechanism. This would punish misbehaving validators based on how far they stray from network norms. But until that rolls out, some experts argue Solana’s staking lacks teeth.
At the same time, Ethereum isn’t without its issues. The 32 ETH minimum stake to run a validator has driven many users to liquid staking protocols like Lido, which now controls 88% of Ethereum’s liquid staking market. This has raised serious concerns around staking centralization.
Ethereum developers are exploring ways to decentralize staking further, but the process is ongoing. For now, the trade-off between accessibility and decentralization remains a key challenge on both networks.
Can Solana Keep Its Momentum Across Other Ecosystem Sectors?
Solana’s recent success in staking is just one part of a broader trend of rising activity in the network’s ecosystem. While critics debate the implications of the Solana staking market cap, the network is seeing major wins in other areas.
Take Solana meme coins, for example. These once-dismissed tokens are now seeing over $100 million in daily trading volume, showing signs of a real comeback. You can read more about that here.
In addition, the Solana Layer-1 infrastructure is showing strength, with ongoing upgrades and new launches aimed at scalability and performance—explore the full picture here.
On the DeFi side, other platforms like PumpSwap are making headlines too. It recently surpassed $1 billion in volume, proving there’s still demand for high-performance alternatives within the Solana DeFi landscape.
Even NFTs are gaining renewed interest. Projects like Bunker are bringing fresh creativity to the space—learn more here.
These wins suggest that while staking rewards might temporarily dominate user focus, Solana’s ecosystem is far from one-dimensional.
Solana’s brief flippening of Ethereum in staking market cap may have sparked mixed reactions, but it’s a signal that can’t be ignored. Whether it’s a bullish sign of growth or a warning that too much capital is locked away passively, the debate is shaping the next chapter of Layer-1 competition.
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