How to value Solana

As outlined in our quarterly reports, cryptoasset valuation is maturing. While the space once relied more on narrative-driven hype cycles, more structured frameworks, akin to those used in traditional finance, are starting to take hold.

Building on Greer and Burniske's classification work, we see Solana’s native token, SOL, as a capital asset, one that delivers recurring economic rewards through real on-chain activity. As networks like Solana evolve into revenue-generating infrastructure, traditional valuation models become not only relevant but essential.

This report applies that lens to Solana, a platform increasingly operating like a tech infrastructure company, powering a new generation of decentralized applications. It can now be analyzed, benchmarked, and ultimately valued as such. By the end, you’ll have a clearer view of what drives SOL’s valuation and where the market may still be mispricing it.

Intrinsic valuation: Solana as a revenue-generating business

At the heart of Solana’s valuation lies its ability to generate tangible, recurring economic rewards. Much like a dividend-paying stock, the network delivers value to validators through two primary streams:

• Network Issuance: New SOL is periodically minted and distributed as a reward for securing the network.
• Transaction Fees: Every transaction on Solana is settled in SOL, with a portion allocated to validators as protocol income.

These mechanisms place SOL at the center of Solana’s economic engine, fueling activity and distributing value. In 2024 alone, this translated into $1.44 billion in validator rewards. With 2025 already outpacing that figure, we apply a conservative 100% YoY growth projection, accounting for shifts like SIMD-0096 (ending the burn of 50% of transaction fees) and the normalization of on-chain activity. As application usage grows, so too does the revenue flowing to validators. 

To quantify this momentum, we turn to a Discounted Cash Flow (DCF) model, a method widely used in equity markets to estimate an asset’s fair value based on expected future earnings.

_{Figure 1 – Solana’s discounted cash flow}

^{Source: 21Shares, Coingecko, Dune. Data as of March 31, 2025}

Even under conservative assumptions, the results are striking: our model suggests SOL is significantly undervalued, projecting over 10x upside at lower discount rates, and a more than 3x upside even at the higher end. While DCFs may not capture every nuance of crypto dynamics, they offer a valuable lens on Solana’s expanding cash flows. As its fee base continues to diversify, Solana’s valuation is increasingly tied not just to speculation but to its underlying economic output.

Relative valuation: How Solana stacks up against its peers

While Solana’s fundamentals make a strong case on their own, valuation doesn’t exist in a vacuum. To understand its standing, we compare Solana to Layer 1 peers that serve similar functions, powering applications, securing value, and acting as foundational blockchain infrastructure. These peers include Ethereum, BNB Chain, Avalanche, and TON.

We focus on two standardized multiples: price-to-sales (P/S) and price-to-fees (P/F). Both are calculated using the fully diluted market cap to ensure total token issuance is accounted for, which is critical in crypto, where supply unlocks can significantly affect valuation.

Solana stands out immediately. Its P/F ratio sits at just 165, by far the lowest among major Layer 1s. That compares to 708 for Ethereum, 1,828 for Avalanche, and over 2,000 for TON.

_{Figure 2 – Comparing price-to-fees ratios across major Layer 1 blockchains}

^{Source: 21Shares, TokenTerminal. Data as of May 26, 2025}

While its P/S ratio, at 1,906, is slightly higher, it is still well below peers like BNB Chain (5,413) and TON (4,398) and remains in line with Avalanche and Ethereum.

_{Figure 3 – Comparing price-to-sales ratios across major Layer 1 blockchains}

^{Source: 21Shares, TokenTerminal. Data as of May 26, 2025}

These compressed multiples highlight a key insight: Solana is processing real on-chain activity, with robust fee generation that reflects genuine demand for blockspace. While not all fees are retained by the protocol, the throughput alone speaks to the network’s economic vitality.

_{Figure 4 – Comparing price-to-fees ratios across major Layer 1 blockchains}

^{Source: 21Shares, TokenTerminal. Data as of May 26, 2025}

Even more compelling, these multiples aren’t just momentary advantages. Historically, Solana has consistently ranked as one of the most attractively valued Layer 1s relative to its activity and revenue. The market continues to underprice just how much utility the network delivers.

_{Figure 5 – Comparing price-to-sales ratios across major Layer 1 blockchains}

^{Source: 21Shares, TokenTerminal. Data as of May 26, 2025}

As token supply comes online and flows into real-world applications, across DePIN, AI, and global payments, Solana’s valuation multiples aren’t just expected to compress, they already are. Both P/S and P/F ratios have steadily declined in recent years, driven not by falling prices, but by rising usage and improved monetization. This sustained trend signals a broader shift: the market is beginning to recognize Solana’s growing role as a high-throughput, revenue-generating platform, with more room to rerate as adoption deepens.

_{Figure 6 – Tracking Solana’s valuation multiples over time}

^{Source: 21Shares, TokenTerminal. Data as of May 26, 2025}

TVL efficiency: Unlocking economic utility

While P/S and P/F capture top-line metrics, we also evaluate how efficiently a network puts its capital to work, through TVL-to-market cap and DEX volume per TVL. Total Value Locked (TVL) serves as crypto’s equivalent to assets under management, especially relevant for DeFi ecosystems. A higher TVL-to-market cap ratio often implies deeper investor trust and ecosystem traction. Ethereum leads this metric, thanks to its vast DeFi stack.

_{Figure 7 – Comparing TVL-to-market cap ratios across major Layer 1 blockchains}

^{Source: 21Shares, Artemis. Data as of May 26, 2025}

Solana, by contrast, sits more mid-pack. But this doesn’t imply low utility. Many of Solana’s most popular use cases don’t require significant locked capital. Within this broader economic context, Solana’s TVL-to-market cap ratio remains healthy. What’s more important is the trajectory: since the FTX collapse in late 2022, Solana’s TVL/MC ratio has climbed steadily, signaling renewed confidence and increased capital deployment into its DeFi ecosystem.

_{Figure 8 – Tracking Solana’s TVL-to-market cap over time}

^{Source: 21Shares, Artemis. Data as of May 26, 2025}

But perhaps the most revealing metric isn’t how much capital is locked, it’s how actively that capital is used. By comparing 12-month DEX volume per $1 of TVL, we measure throughput per unit of capital. And here, Solana dominates. This level of efficiency underscores Solana’s real strength: it’s not just attracting capital, it’s putting it to work. The result is outsized economic activity on a leaner capital base—positioning Solana as a chain designed for real usage thanks to its high throughput and low friction.

_{Figure 9 – Comparing DEX volume per $ of TVL across major Layer 1 blockchains}

^{Source: 21Shares, Token Terminal. Data as of May 26, 2025.}

Market sizing: Where does Solana fit among its competitors?

No single metric tells the full story, but viewed together, Solana’s valuation profile presents a compelling case. Across price-to-fees, price-to-sales, TVL efficiency, and DEX volume per dollar of TVL, one theme stands out: Solana is powering real economic activity. And yet, the network continues to be valued at a meaningful discount to its peers.

Of course, crypto remains an evolving asset class, and Solana, despite its momentum, still faces challenges that could shape its trajectory:

• Rising competition from performant Layer 2s (like Base) and new Layer 1s (like Sui and TON). Solana is responding with Firedancer, a second validator client expected to push throughput beyond 1 million transactions per second and deepen execution resilience.
• Validator decentralization concerns, due to hardware costs and concentrated delegation. The Solana Foundation is easing onboarding via subsidies and a revamped delegation program to broaden validator participation.
• Speculative activity concentration, with memecoins accounting for a large share of volume. To counter this, ecosystem funds are increasingly backing utility-focused projects in areas like DePIN and AI.
• Client centralization creates resilience risks. The rollout of alternative clients like Firedancer aims to reduce single points of failure and strengthen network reliability.
• Inflation dynamics, particularly following SIMD-0096. Ongoing governance proposals are exploring dynamic emissions models to maintain sustainable tokenomics.

Despite these headwinds, Solana’s core advantages continue to compound. And when benchmarked against Ethereum, the upside potential becomes more visible.

Today, Solana trades at roughly one-third of Ethereum’s market cap, despite rapidly narrowing the gap in usage and economic output. While a full "flippening" may not be imminent, Solana’s trajectory suggests meaningful convergence is possible.

If Solana were to reach just 50% of Ethereum’s market cap, its implied price would rise to $316, nearly a 2x from today. At full parity, the target exceeds $630. These aren’t price predictions, but directional benchmarks, useful markers for understanding how the market could evolve as Solana scales. With clear execution, expanding adoption, and demonstrable traction across verticals, Solana is increasingly positioned not just as an Ethereum alternative, but as a foundational pillar in the next generation of the crypto economy.

_{Figure 10 – Projected SOL price at various % of Ethereum’s market cap}

^{Source: 21Shares, CoinGecko. Data as of May 29, 2025.}