Ever since DeFi and NFTs started gaining popularity, the competition among blockchain networks enabling these applications has been heating up. Ethereum had been the big bully on the DeFi playground with no competition for a long time, but 2021 witnessed the rise of other networks like Polkadot, Solana, Cardano, etc. These promised to do what Ethereum couldn’t for the longest time– faster transactions at lower costs.
For example, Solana, a close competition to Ethereum, claims a maximum capacity of 65,000 transactions per second (TPS), while Ethereum’s max capacity is 15 TPS. Although this is changing now since Ethereum shifted to PoS. But the competition to become the ultimate dApp platform hasn’t ended yet. And today, we will compare the two most promising networks in the space and see who has the potential to win the game: Solana vs. Ethereum.
Ethereum Definition
Ethereum is the first-ever programmable blockchain. It offers smart contract functionality to allow developers to build decentralized applications (dApps) and has played a major role in the growth of NFTs and DeFi apps. Not all dApps are DeFi apps. dApps is a broader term for all applications built on blockchain. On Ethereum, developers have a wide array of tools to help them build applications.
The Ethereum network has its native coin called Ether (ETH). It is used to pay the gas fees on the network. Gas fee is the transaction fee paid to validators on the network for validating transactions. Ethereum recently transitioned from proof-of-work to proof-of-stake with the highly publicized Merge. This switch has lowered transaction costs on the network by 93% and allows the blockchain to process up to 100,000 TPS.
Solana Definition
Solana was developed to solve one of the most pressing issues of the crypto world – Scalability.
As of now, Ethereum is the most widely used blockchain network to build dApps on. However, it can only scale so much until it starts to break. The Ethereum network’s lack of scalability slowed down its widespread adoption. Its limited bandwidth did not allow for a transaction throughput higher than 15-30 TPS, at least until the switch to proof-of-stake.
Solana overcomes all of this. It has a “stateless” architecture that helps it process transactions faster. A stateless architecture is one in which previous transactions are not used as a reference for subsequent ones- all transactions are processed independently. This reduces the network’s overall memory consumption, allowing for scalability.
Solana Vs. Ethereum: Key Differences
| Solana | Ethereum | |
| Mechanism | Uses Proof-of-History consensus mechanism in tandem with Proof-of-Stake. It determines the time between two events by using certain computational actions. Each transaction is tracked by adding a timestamp to it. | Used Proof-of-Work consensus mechanism before the Merge. Uses Proof-of-Stake since. Validators chosen by the protocol validate transactions. The more the coins staked, the higher the chances of becoming validator. |
| Programming Language | Uses well-known programming languages, like- CC++Rust | Smart contracts are written using custom languages, such as- SolidityViperFeYul/Yul+ |
| Decentralization | Comparatively more centralized than Ethereum. The top 30 validators on the network hold 35% of the total stake, thereby controlling a big fraction of the system. | More decentralized than Solana. In fact, decentralization has increased since April 2022. Decentralization for PoS networks is measured by calculating the percentage of a coin’s circulating supply staked to a network and how many participants it’s divided among. |
| Downtime | Has had several downtimes in the past due to outages, leading to an interruption in transactions | Has never experienced downtime since its inception |
| Transaction Cost | Low gas fees (transaction costs) owing to low block time (0.4 secs) and high block size (20,000). | High gas fees owing to high block time (13 seconds) and low block size (70). |
| Network Size | The total value locked (TVL) in Solana is $318 million. | The TVL in Ethereum is $24.79 billion. It is the largest smart contract network and houses most DeFi apps. |
| Transaction Speed | Solana can process more than 50,000 transactions per second (TPS) | Ethereum 1.0 could process 30 TPS. Ethereum 2.0 can process up to 100,000 TPS. |
| DeFi Ecosystem | The DeFi ecosystem on Solana is not as expansive as it is on Ethereum. But Solana is significantly younger, and it is growing its ecosystem by attracting users with hackathons and bug-bounty programs. | Ethereum has a much larger and more diverse DeFi ecosystem than Solana’s. Most DeFi apps and NFT marketplaces exist on Ethereum. |
| Market Cap | $5 billion. SOL (native coin) has no fixed maximum supply, but it does have a fixed inflation rate which diminishes over time. | $163 billion. There is no fixed maximum supply of ETH (Ether) either, but it does issue only a maximum of 18 million ETH annually. It ranks second in the crypto market, only below Bitcoin. |
| NFTs | Solana is new to the NFT game, but it allows users to buy NFTs without transaction fees, making them more accessible. | Ethereum wasn’t the first blockchain where you could mint NFTs, but it currently sees the highest NFT volume. It also houses the biggest NFT marketplace, OpenSea. |
Solana or Ethereum: Which Is Better?
This is a very subjective question. The answer to it depends entirely on your needs and the features you require from a particular blockchain to fulfill those needs.
If you are a developer, you need to check out the tools that are available on both networks and how useful they’ll be to you. As an investor, other aspects might factor into your decision. For example, Solana is faster, and it charges lower transaction fees on its network. But Ethereum is a lot more popular in the crypto world and, thus, sees a higher trading volume on its network. Moreover, with the transition to Ethereum 2.0, Ethereum has become more scalable and has improved transaction speed on its network.
Conclusion
Ethereum has been around for a long time now, and it has established a loyal community that is bullish about the network’s growth prospects. Moreover, it’s the largest smart contract network and houses some of the most popular DeFi apps like MetaMask and SushiSwap.
Solana is the new kid on the playground that offers improved scalability, challenging Ethereum. Quite recently, it lost its footing during the FTX crash, but enthusiasts are hopeful of a full recovery.
FAQs
1. Is it safer to use Solana than Ethereum?
While Solana is the faster and cheaper of the two options, Ethereum is more secure. This is considering the fact that Ethereum is vastly more decentralized than Solana. The top 30 validators on the Solana network hold over 35% stake. This makes Solana more centralized and, thus, less secure.
2. Will Solana be as popular as Ethereum?
Ethereum has been around for far longer and has managed to build a loyal community. It also houses some of the most popular DeFi apps and the biggest NFT marketplaces.
On the other hand, Solana had been growing at a healthy rate up until it became collateral damage in the FTX crash. Enthusiasts are hopeful of a recovery but if it’ll overtake Ethereum’s popularity is a question for which a straightforward answer does not exist.
3. Ethereum or Solana, which is faster?
Solana is much faster than Ethereum due to its low block time and high block size. Block time is the average time required to mine a new block, while block size is the number of data transactions it can store. Ethereum’s block time has improved after the Merge, but Solana still remains faster.
