Solana (SOL), currently the seventh-largest cryptocurrency by market cap – behind Bitcoin (BTC), Ethereum (ETH), USDT, Binance Coin (BNB), XRP and USDC – may be on track to surpass its closest competitor, XRP.
This potential shift is largely due to the increasing infrastructure race between the two projects, as highlighted by market analyst Alex Carchidi of The Motley Fool in a report Tuesday.
The race for tokenization capital
Although XRP has a larger market cap of approximately $87 billion compared to Solana’s $50 billion at the time of writing, both assets are competing to become the backbone for the tokenization of real-world assets (RWAs), such as stocks and commodities converted for trading on blockchains.
Carchidi notes that Solana’s strengths lie in its speed and cost-effectiveness, making it particularly suitable for managing tokenized assets that require rapid movements at scale, such as stocks, bonds and commodity contracts.
The Solana platform currently has approximately $272 million worth of tokenized shares in circulation within its ecosystem, marking a 14% increase from the 30-day period ending March 5.
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Predictions indicate the total market value of tokenized shares could reach over $38 billion by 2035, compared to around $1 billion today, indicating a substantial growth area ripe for competition.
The argument for Solana’s potential to overtake XRP hinges on its ambition to become the central hub for trading stocks, exchange-traded funds (ETFs) and institutional funds 24 hours a day, all at minimal costs.
Carchidi claims that Solana doesn’t necessarily need to capture 100% of the tokenized asset market to see a significant price increase.
It’s current market capitalization is already so close to that of XRP that even a modest gain at XRP’s expense could tip the balance in Solana’s favor. Carchidi acknowledges that Solana can indeed flip XRP. However, the path for SOL to surpass XRP is not without challenges.
XRP’s edge against Solana
Currently the XRP ledger (XRPL) owns approximately $453 million in tokenized assets that are available specifically for trading, rather than just record keeping. The stablecoin base on XRPL currently stands at approximately $432 million.
A substantial portion of XRP’s tradable tokenized assets consists of U.S. Treasuries and Treasuries worth approximately $294 million. At first glance, this setup might not seem to threaten Solana’s growth trajectory.
Still, the analyst claims that XRP has its own advantages. Known for its speed and low transaction fees, XRP also benefits from a robust compliance infrastructure integrated into the blockchain.
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This allows financial institutions looking to tokenize assets such as bonds, stocks or securities to avoid the time-consuming process of developing a compliance framework from scratch. As a result, XRP may attract more capital inflow related to tokenization in the coming years.
Despite these challenges, the analyst believes that Solana will ultimately outperform XRP in terms of valuation, possibly in 2030 and beyond, thanks to its plans for a larger ecosystem.
At the time of writing, Solana was trading at around $88.48, up 2.7% in the past 24 hours. XRP, on the other hand, has outpaced SOL’s growth over the same period, with a gain of almost 5% and a token trading at $1.43.
Featured image from OpenArt, chart from TradingView.com