Franklin Templeton Argues Solana DeFi Is Undervalued

Solana’s thriving DeFi scene has dominated onchain metrics throughout recent quarters. However, it seems the world’s largest financial players are only now starting to take notice.

Highlighting a perceived imbalance in crypto markets, TradFi giant Franklin Templeton has published a report on why Solana DeFi tokens could be undervalued.

Why are investors still hesitant to position themselves in Solana DeFi, and which tokens are showing strength amidst turbulent markets?

Solana DeFi Tokens Undervalued

Weeks after filing an S-1 registration statement for its spot Solana ETF, Franklin Templeton has published more material illustrating its belief in the Solana ecosystem. 

In its latest crypto research report, Franklin Templeton highlights a distinct asymmetry between Solana and Ethereum DeFi token valuations and their respective protocol fees and activity.

Over the course of the last year, Solana DEX volume has steadily claimed and grown market dominance over not only the Ethereum Layer-1 itself, but also Layer-2s and alternative EVM networks. 

In January, Solana commanded 53% of the total market share, making it the distinctive leader in onchain trading. While dominance dropped slightly in February, Solana still recorded its 5th consecutive month atop the DEX trading volume rankings among all blockchains.

Buoyed by Solana’s explosive DeFi scene, applications on the network have enjoyed surging protocol fee generation. Protocols like Jito, Jupiter, and Raydium witnessed astronomical YoY growth in Q4, far surpassing their Ethereum counterparts.

Herein lies the great dissonance between Solana and Ethereum DeFi valuations. Franklin Templeton argues that Solana DeFi tokens are better positioned for sustainable growth than similar tokens on Ethereum. 

“Solana DeFi valuation multiples trade on average lower than their Ethereum counterparts despite significantly higher growth profiles” - Franklin Templeton Digital Assets

Proportionally speaking, Solana DeFi apps generate more protocol fees compared to their market value.

Despite higher potential upside, Franklin Templeton recognizes that market participants may consider Ethereum DeFi tokens a safer investment given the network’s stability and security. However, the TradFi giant refutes this argument, highlighting one year of uninterrupted uptime and Solana’s upcoming Firedancer client as a critical step towards greater network security.

Solana Ecosystem Tokens Show Strength on Bounce

Despite turbulent market conditions caused by President Trump’s U.S. Crypto Reserve announcements and ongoing trade wars, Solana ecosystem tokens are showing resilience.

Solana DePIN tokens have been some of the strongest performers since Monday’s market crash. Meanwhile, markets seem to have confirmed Franklin Templeton’s argument and continue to overlook Solana DeFi assets, which have struggled to bounce back with the same tenacity.

At face value, markets appear to be regaining confidence in the face of Donald Trump’s volatile trade war. All eyes now turn to March 7’s White House Crypto Summit, where the Trump Administration is expected to deliver greater clarity on the formation of the U.S. Crypto Reserve.

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