Financial Institutions Turn to Solana for Future-Proofing as PayPal USD Expands Network Integration

Solana, which ranks fourth in total value secured (TVL), is emerging as a frontrunner in institutional adoption. As an effort to "future-proof" their offerings

Financial institutions are increasingly turning to Solana for future-proofing their offerings, with the recent integration of PayPal USD on the network serving as a prime example.

Solana, which ranks fourth in total value secured (TVL), is emerging as a frontrunner in institutional adoption.

As an effort to “future-proof” their offerings, an increasing number of financial institutions will integrate with the Solana blockchain, according to Robinson Burkey, co-founder and chief commercial officer of Wormhole Foundation.

In a note to Cointelegraph regarding research, Burkey said:

“Solana and institutions make sense. Industry leaders like PayPal, Stripe, and Visa must future-proof their offerings. The best way to do that is by meeting their most forward-thinking users on the platforms they're adopting. You'll likely see many more institutional moments for Solana in the coming years.”

PayPal made its initial foray outside the Ethereum ecosystem onto a blockchain with the May 28 expansion of its PayPal USD stablecoin to the Solana network.

Through the integration, Solana users can execute low-cost transactions on the network utilizing PYUSD, expanding the stablecoin’s applicability to routine expenditures.

Before this, Visa, a multinational payments corporation, introduced USD Coin on the Solana blockchain in September 2023. The network became the second to support the stablecoin, following Ethereum.

Solana’s scalability and low costs drive institutional adoption, positioning it for potential ETF launch

Solana is among the blockchain networks with the highest scalability, capable of processing massive volumes of transactions at a rapid pace.

With a theoretical throughput of 65,000 transactions per second (TPS) and a mean transaction cost of $0.0025, Solana far outstrips Ethereum’s 15 TPS and considerably elevated gas fees (which commence at $1 but escalate to $50 during network congestion).

According to Ran Goldi, vice president of payments at Fireblocks, Solana’s infrastructure can effortlessly incorporate the current operations of conventional payment institutions, boosting institutional adoption.

“Solana can handle the volume that payment institutions are used to working with, which will lead to more names integrating the network into their flows,” Goldi said in a statement to Cointelegraph.

“The key, as I see it, is making sure your blockchain can support the ‘under the hood’ payment requirements for compliance, regulation, and privacy.”

Highlighting the requirement for confidential transfers, Goldi added that adding the feature could enable Solana to secure even more institutional partnerships:

“Do that, and add speed and vast liquidity, [Solana] can become a sharp tool in the hands of payment institutions.”

Solana ranks as the fourth-largest blockchain network in terms of TVL, boasting over $4.7 billion or 4.49% of the total TVL across all blockchains, based on data from DefiLlama.

According to Tristan Frizza, the founder of Zeta Markets, Solana is positioned to become the next cryptocurrency to receive a spot exchange-traded fund (ETF) and increase institutional adoption.

In a note that she shared with Cointelegraph, Frizza said:

“Solana is seen as one of the ‘big three’ cryptos alongside BTC and ETH, with many analysts expecting a Solana ETF soon. With major partnerships like Visa, Stripe, Shopify Pay, and PayPal, merchant and institutional adoption of Solana is likely to grow.”

Earlier this year, hopes for a Solana-based ETF were sparked when Franklin Templeton, a trillion-dollar asset manager, highlighted Solana's monolithic approach to blockchain scaling, describing it as a "powerful use case of decentralized blockchains," as reported by X on Jan. 17.

Highlighting theartamentof Solana's architecture for institutional adoption, CNBC Fast Money trader and crypto investor Brian Kelly hypothesized that Solana might be the subsequent cryptocurrency to receive a spot ETF in the United States.