According to a recent report by Standard Chartered Bank, the Layer 1 blockchain Solana may be evolving into a "single-purpose platform" focused solely on generating and trading Meme coins. This shift could pose significant challenges for Solana's growth trajectory as Meme coin trading volumes decline.

The report, released on May 27, highlights that Solana has dominated the space of high-volume, low-cost public blockchains. This is largely due to its design architecture, which enables fast and low-cost transaction confirmations. However, this technological advantage has led to an unintended consequence: so far, it has primarily concentrated on Meme coin trading, which accounts for the majority of activities on Solana (measured by "GDP," or application revenue).

Standard Chartered notes that while the Meme coin boom has stress-tested Solana's scalability, the volatility and speculative nature of these assets also bring drawbacks. As Meme coin trading volumes decline, the bank warns that Solana may struggle to maintain its momentum.

The report indicates that the Meme coin frenzy on Solana has passed its peak, and the combination of declining usage and "cheap" transactions is not ideal. The bank suggests that Solana should expand into other areas that require large volumes of low-cost, fast transaction processing, such as high-throughput financial settlements, decentralized cloud computing, or real-time data exchanges. These emerging fields are highly compatible with Solana's high-throughput characteristics.

According to the report, potential areas for expansion may include high-throughput financial applications and traditional consumer applications like social media. However, the bank points out that scaling these applications could take several years, which could have severe consequences for Solana. If progress does not meet expectations, Solana's market competitiveness, developer ecosystem, and platform credibility may suffer significant damage, and its valuation could face substantial downward pressure.

"Therefore, we expect Solana to underperform Ethereum over the next two to three years before it catches up, at least in terms of real value," the report states.

Solana has long positioned itself as a fast, low-cost, smart-contract-enabled Layer 1 blockchain, competing directly with Ethereum. However, this advantage may be diminishing. Since the Dencun network upgrade in March 2024, Ethereum's Layer 2 platforms have surpassed Solana in terms of average transaction costs. This shift puts pressure on Solana's value proposition as the "cheapest high-throughput blockchain."

Standard Chartered notes that Ethereum's modular design, which separates data availability, execution, and consensus, has enabled more efficient scaling while maintaining decentralization. "The modular approach allows Ethereum to scale transaction processing at a low cost (after the Dencun upgrade) while retaining the security advantages of a highly decentralized mainnet," the report explains.