Solana momentarily overtook Ethereum in total staked value this past weekend. The milestone came as over $53.9 billion worth of SOL was locked into the network across more than half a million unique wallets, earning stakers an annualized return of 8.31%, according to on-chain data. This briefly eclipsed Ethereum’s staked market cap, which now sits just above $53.93 billion from 34.7 million ETH. At first glance, the numbers may seem like a bullish signal for Solana. Its native token has significantly outpaced ETH in performance over the past two years, with the SOL/ETH ratio surging nearly tenfold since mid-2023. Yet, for many analysts, the data may suggest headwinds rather than tailwinds for Solana’s broader ecosystem. Staking Rewards Too Good to Ignore? While Solana’s staking yield stands far above Ethereum’s more modest 2.98%, some industry insiders argue that this very strength might be hamstringing the network’s decentralized finance (DeFi) growth. The core issue: if you can earn over 8% “risk-free” by staking SOL, why bother taking on the additional risks of DeFi protocols? “It doesn’t make sense for you to provide liquidity on a SOL/USDC AMM when that might earn you 5% but staking earns you 7%,” said Tushar Jain of Multicoin Capital. The sentiment was echoed by developer JC of Builda Protocol, who pointed out that staking 65% of Solana’s market cap effectively removes a large chunk of the token’s utility elsewhere. DeFiLlama data supports the concern: Ethereum boasts a whopping $21.5 billion in liquid staked ETH, compared to only $7.22 billion in liquid staked SOL. Ethereum also holds a commanding lead in total DeFi value locked—$50.4 billion versus Solana’s $8.85 billion. Critics Push Back Beyond returns and adoption, Ethereum advocates raised questions about the security of Solana’s staking model itself. “It’s very ironic to call it ‘staking’ when there is no slashing,” Ethereum researcher Dankrad Feist said, arguing that Solana lacks mechanisms to punish validators for malicious behavior. Solana Labs has countered that slashing is technically possible but requires manual intervention and could involve restarting the entire network. CEO Anatoly Yakovenko has proposed a “correlated slashing” mechanism to be rolled out later this year, aiming to introduce meaningful penalties that scale with the damage done. Meanwhile, Ethereum grapples with its own challenges —chief among them, decentralization. With Lido holding 88% of the network’s liquid staking market, centralization concerns loom large. Still, Ethereum continues to lead in validator count and DeFi activity, keeping the long-standing Layer 1 rivalry alive and as complex as ever. The post Solana Briefly Flips Ethereum in Staked Value—But Not Everyone’s Celebrating appeared first on TheCoinrise.com .