The world of blockchain and cryptocurrencies is continually evolving, with new technologies emerging to address the limitations of existing ones. Among these innovations, Solana (SOL) has gained significant attention in a very short time.
Solana has been dubbed as the “Ethereum Killer”, which is quite a title for a new player. It should be worthwhile then to take a deeper look into this blockchain that is quickly rising in popularity.
This article will take a short dive into the history of Solana and look into what makes it stand out compared to Ethereum. Further down, we will also deduce some of Solana’s advantages and drawbacks and why we think it holds potential in the future.
A Brief History of Solana
Solana was founded in 2017 by Anatoly Yakovenko, a former Qualcomm engineer with extensive experiences in the tech industry. He wanted to create a highly scalable blockchain, and so Solana’s mainnet was launched in March 2020. Since then, Solana has rapidly grown in popularity, attracting developers and investors with its promise of very fast and affordable transactions.
Yakovenko envisioned a platform that could support thousands of transactions per second (TPS) without sacrificing decentralization or security. At the time of writing, Solana’s real time TPS and Max Recorded TPS are many times higher than Ethereum’s (source: https://chainspect.app/compare/ethereum-vs-solana).
Why Is Solana Better Than Ethereum?
- Speed:
In just a few years, Solana has managed to average 400 user-generated transactions per second (TPS), and this typically surges to more than 2,000 user-generated TPS during periods of peak demand. (source: A deep dive on Solana, a high performance blockchain network). - Consensus Mechanism:
This high throughput of TPS is achieved through its unique consensus mechanism called Proof of History (PoH), which timestamps transactions to optimize the validation process. One of the drawbacks of using PoH however is an increased risk of bugs and vulnerabilities as it is a complex network architecture (source: What Is Solana’s Proof of History? A Beginner’s Guide). - Low Transaction Fees:
Solana’s efficient architecture allows for minimal transaction fees, often costing a fraction of a cent. In contrast, Ethereum’s fees can become extremely high during periods of network congestion. Transaction fees that are easier to predict vs Ethereum’s wildly fluctuating fees makes Solana an attractive choice. - Scalability:
One other key difference is Solana’s design that inherently supports scalability without the need for Layer 2 (L2) solutions or sharding. This is not the case with Ethereum as L2s are crucial to handle higher transaction volumes. Solana network also has a ‘stateless’ architecture that helps reduce overall memory consumption and this is one of the factors that enable the network to be highly scalable.
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Why Solana Is Not Superior To Ethereum
While Solana may look better than Ethereum on the surface, here are some reasons why it has not yet completely taken over Ethereum’s market share:
- Decentralization:
While Solana is fast and efficient, it has faced criticism for being less decentralized than Ethereum. A smaller number of validators control the network means there is more risk of centralization. - Ecosystem Maturity:
Ethereum has been around longer and boasts a more mature and extensive ecosystem. There is still a larger array of decentralized applications (dapps), developers, and robust developer tools on Ethereum. There are over 2900 dapps on Ethereum platform while Solana only has about 350 (source: Ethereum vs. Solana: How They Stack Up). - Security Concerns:
Solana’s rapid development and relatively young network have led to occasional security issues and outages. Ethereum, with its longer track record is considered more battle-tested.
Potential for the Future
Despite its drawbacks, Solana holds great potential for several reasons:
- Continuous Improvement:
Solana’s development team is actively working on improving the network’s security and decentralization. As these improvements are implemented, the platform will likely become more robust and secure. - Increasing Adoption:
More developers and projects are turning to Solana due to its high performance and low costs. As the ecosystem grows, so will the network effects. We are already noticing more users and developers jumping onto Solana. - Institutional Interest:
There is substantial interest from major institutional investors and venture capitalists, and this provides the funding necessary for ongoing development and growth. - Innovative Use Cases:
The network’s speed and efficiency make it well-suited for innovative applications, such as decentralized finance (DeFi) platforms, non-fungible tokens (NFTs), and Web3 projects. All these application require fast and affordable transactions and Solana is able to satisfy those needs. Lately, gaming is also gaining traction on Solana.
Solana vs Other Top Cryptocurrencies
| # | Coin | Price | Marketcap | Volume (24h) | Supply | Change | Last 24h |
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Solana (SOL) Price Chart
Let’s take a short break from reading to watch this video about Solana. I simply put it here because the narrator speaks with a quirky voice.
What is Solana? SOL Explained with Animations
Video by Whiteboard Crypto
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Advantages
Before we conclude, here is a brief recap of the advantages and drawbacks of Solana:
- High Performance:
Solana’s ability to handle a massive number of transactions per second makes it ideal for high-frequency trading, gaming, and other applications that require fast and reliable transactions. - Cost-Effective:
The extremely low transaction fees makes it very attractive for developers and users who want to avoid the high costs associated with Ethereum. The high transactions fees on Ethereum is especially prevalent during times of high demand. - Growing Ecosystem:
Despite being newer, Solana’s ecosystem is expanding quickly. There are many projects and developers that are migrating to the platform due to its performance benefits.
Drawbacks
- Centralization Risks:
The relatively small number of validators can lead to concerns about network security and centralization, which goes against the core principles of blockchain technology. - Network Outages:
The network has experienced several outages and performance issues, raising questions about its reliability and robustness under heavy load. - Limited Adoption:
Although growing, Solana ecosystem is still much smaller than Ethereum’s, which means fewer dapps and less overall liquidity.
Conclusion
Solana’s innovativeness is proving to the world that the blockchain technology has much to offer. Despite being the ‘new kid on the block’, Solana has proved itself to be worthy of being a prominent player in the blockchain technology industry. To date, it has proven to be capable of addressing the weaknesses of Ethereum with its remarkable transaction speeds and much lower transaction costs.
While it faces challenges related to centralization and network reliability, its potential for future growth and innovation remains steady. As the blockchain landscape continues to evolve, Solana’s ongoing development and expanding ecosystem position it as a formidable contender. In the near future, we can expect Solana to be more scalable, efficient, and decentralized.
