Every investor eventually learns that price and value are not the same thing, but with crypto investments specifically, the learning process can be a bit harder because the important metrics to watch are different. One simple way to separate the two concepts is to ask a basic question, like how much economic value does a blockchain capture from the average person using it?
And if we ask that question about Solana, (CRYPTO: SOL) the result is that the coin is a bargain, especially relative to its biggest competitor, Ethereum (CRYPTO: ETH). Here’s why.
Fees per user is the tell
The metric that we’re talking about here is called the average fees per user (AFPU).
In sum, AFPU measures the protocol fees paid per active user over a specific period. In other words, it is the total of gas (user) fees and other network-related fees divided by the number of users who actually did something that generated revenue for the chain or one of its ecosystem projects. You can also think of this as the sum of the platform-related costs that users have paid to do business on the network, stated as the cost burden for each user for the period. The higher the AFPU, the higher the price users are willing to pay to interact with the chain’s smart contracts and decentralized applications (dApps).
Right now, Solana’s AFPU is about $0.51 per day, and Ethereum’s is near $2.50. So at first glance you might assume that Ethereum’s ecosystem is generally in a state of higher demand for its services than Solana’s.
But for context, Solana’s transaction fee is typically fractions of a cent, whereas Ethereum’s median transaction fee in recent weeks has hovered near $1 on quiet days and higher when demand spikes. So to generate its total user fees, users of Solana transact many times more than their peers on Ethereum.
Now look at size of these two assets. Ethereum’s market cap is roughly $505 billion and Solana’s is about $117 billion, or about a quarter as large. Put two and two together: Solana’s AFPU sits within reach of Ethereum’s, even though per-transaction costs on Solana are a tiny fraction of Ethereum’s and Solana’s market value is much smaller. That means Solana is monetizing activity far more efficiently relative to its size, which is exactly what you want if you are buying an asset for its long-term earning power.
