Asset management firm Franklin Templeton has released a comparative study on the decentralized finance (DeFi) ecosystems of Solana and Ethereum. The report highlights a significant shift, marking the first time since Ethereum’s inception that non-EVM (Ethereum Virtual Machine) infrastructures are capturing a substantial share of DeFi activity. This development could signal the emergence of an SVM (Solana Virtual Machine)-led or at least a non-EVM-dominated era.
DeFi Migration and Ethereum’s Scaling Solutions
The study also points to the ongoing migration of DeFi activity from Ethereum’s mainnet to layer-2 blockchains, indicating progress in Ethereum’s scaling efforts. This trend is further reinforced by the launch of high-throughput EVM-compatible public blockchains, which aim to improve Ethereum’s scalability and efficiency.
Solana’s Resilience and Valuation Realignment
As Solana continues to establish itself as a robust decentralized computing platform, the market may start aligning the valuations of its blue-chip DeFi protocols with their Ethereum counterparts. While Ethereum (ETH) has historically been the backbone of DeFi, 2025 has brought forth an undeniable challenge from Solana (SOL).
Solana Gains Ground in DeFi
Ethereum has long led the DeFi space, boasting the highest total value locked (TVL) and driving up to $600 billion in monthly trading volume. However, its dominance is now facing sustained pressure from Solana’s high-speed, low-cost transactions, which have fueled a surge in DeFi adoption.
In a groundbreaking milestone, Solana’s decentralized exchanges (DEXs) processed more volume in January than all EVM-based DEXs combined. While Ethereum remains the largest smart contract platform by market capitalization, Solana’s rapid growth is forcing analysts to reassess the future of DeFi.
The SVM vs. EVM Debate
The rise of Solana has reignited discussions on whether the SVM is superior to Ethereum’s EVM. Historically, Ethereum has been the preferred choice for DeFi applications due to its infrastructure and network effects. However, Solana’s increasing market share suggests a shift in developer and user preferences.
The Franklin Templeton report suggests that “DeFi may be entering an era of Solana Virtual Machine (SVM) dominance, shifting away from the historical reign of EVM-based DeFi.” Notably, Solana’s DeFi protocols trade at lower valuation multiples despite experiencing significantly higher growth rates, indicating a possible undervaluation of the ecosystem.
Ethereum’s Reign Holds—for Now
Despite Solana’s rapid rise, Ethereum still benefits from key advantages, including a larger developer base, strong institutional adoption, and deep liquidity. Many experts argue that while Solana is not yet poised to dethrone Ethereum, it has solidified itself as a formidable competitor.
As Solana’s DeFi ecosystem matures, its protocols may begin to reflect valuations similar to Ethereum’s, reinforcing its growing influence. While Ethereum remains the dominant force in DeFi, it is clear that Solana is no longer just an alternative—it is an undeniable challenger shaping the future of the space.
