Solana can gain this edge due to its faster unstaking process compared to Ethereum’s congested withdrawal queues. At Token2049 in Singapore, he explained that delays in Ethereum’s system make it harder for issuers to return assets quickly, while Solana offers more flexibility. The conversation happened as the SEC is in the process of reviewing multiple Solana and Ethereum ETF applications, though decisions could be delayed by the ongoing US government shutdown.
Solana May Gain Edge Over Ethereum
Bitwise CEO Hunter Horsley believes Solana could gain an advantage over Ethereum in the race to launch staking exchange-traded funds (ETFs), due to the fact that its design is more favorable for investors. At Token2049 in Singapore, Horsley explained that Solana’s quicker unstaking process gives it an edge, particularly when compared to Ethereum’s growing withdrawal queues. He said that issuers must be able to return assets to investors quickly, and delays in Ethereum’s system pose a big challenge.
Staking requires users to lock up tokens to secure a network in exchange for rewards, but withdrawals can take time depending on network demand. Ethereum-based products have tried to address this by using credit facilities to maintain redemption liquidity or by relying on liquid staking tokens like Lido’s stETH. However, Horsley appointed ut that credit facilities add costs and face capacity limits, while liquid staking alternatives come with their own complexities.
Ethereum’s staking system recently saw mounting congestion. Earlier in September, its staking entry queue surged to 860,369 ETH, which is the highest level since 2023. Now, the entry queue is still close to 200,000 ETH, with wait times averaging around three days, while the exit queue stretches to roughly 34 days with more than 2 million tokens awaiting withdrawal. In contrast, Solana’s queues typically clear faster, which creates a much more flexible environment for ETF issuers.
Ethereum validator queue (Source: Validatorqueue.com)
The timing of Horsley’s comments coincides with certain key regulatory decisions. The US Securities and Exchange Commission (SEC) is expected to rule on several Solana and Ethereum ETF applications this month, including those with staking provisions.
Bitwise, Fidelity, Franklin Templeton, CoinShares, Grayscale, Canary Capital, and VanEck are all among the firms that filed updated applications for Solana ETFs. Meanwhile, decisions on Ethereum staking ETFs, including BlackRock’s iShares Ethereum Trust, were postponed until late October.
In total, 16 crypto-related funds are currently awaiting SEC approval. However, progress could be delayed even more due to the ongoing US government shutdown that left federal agencies operating with limited staff.
