Ethereum vs Solana
The cryptocurrency market has been rapidly growing in recent years and investors need to decide where to place their money so that they can get maximum returns. Layer 1 blockchains have performed extremely well in the market giving up to 25000% returns. The two most well-known layer blockchain available is Solana and Ethereum, and both provide different advantages to investors. We will compare Solana and Ethereum in this article to make it easier for you to decide which is the better investment.
A high-performance blockchain platform called Solana was introduced in 2020. It was created to address the scalability problems that other Layer 1 blockchains, including Ethereum, were experiencing. The Solana foundation supports Solana, an open-source, permissionless blockchain. It operates on a proof-of-stake consensus model, which has been enhanced by the proof-of-history idea developed by Anatoly Yakovenko, one of the Solana co-founders. Anatoly’s solution to the blockchain trilemma is proof of history, which builds a highly scalable decentralised network that can match the speed of conventional payment networks like Visa.
First-generation blockchain like Bitcoin has a max transaction per second(TPS) of just 7 and second-generation blockchain like Ethereum has a max TPS of 15. Generation 3 blockchain like Solana outperforms everything with their capacity to handle around 65,000 transactions per second and create a block every 800 milliseconds.
While Alameda research is a prime investor in Solana, the price of Solana dipped sharply after the FTX crisis, which led to many investors losing faith in Solana. But the price has greatly recovered since then.
The second-largest cryptocurrency in the world is Ethereum, which was introduced in 2015. Ethereum transitioned from PoW(proof of work) to PoS(Proof of Stake) in 2022. As part of a substantial upgrade to the Ethereum network, Ethereum switched to the proof-of-stake protocol, which enables users to confirm transactions and create new ETH depending on their ether holdings.Today, Ethereum has two layers. Transactions and validations take place in the execution layer, which is the first layer. Consensus is the second layer, where attestations and the consensus chain are kept up to date.
Ethereum is continuing “sharding” development to solve scalability. The Ethereum network will distribute the database using sharding. This concept is comparable to cloud computing, where a large number of computers share the workload to allow faster computation. These more compact database segments will be known as shards, and individuals who already have staked ETH will work on shards. More validators will be able to work simultaneously, thanks to shards, which will reduce down on the time required for the so-called “sharding consensus” process. sharding will be implemented around 2023.
Developers can create decentralised applications, or dApps, on the blockchain of Ethereum, a decentralised platform. The most popular platform for developing dApps, Ethereum has a large developer community.
Ethereum vs Solana (as of Feb1 , 2023)
|Market Cap||190 Billion USD||8.7 Billion USD|
|Consensus mechanism||PoS||PoS + poH|
|Transaction per second(TPS)||65,000||15|
|Avg fee per txn.||0.78 USD||0.0015 USD|
|Block confirmation time||12.06 s||800 ms|
|Total Network Transactions||1.8 Billion||139 Billion|
|Number of validators||500.000 +||2298|
|Nakamoto coefficient||2 *||19|
|Number of active developers||4000+||1000+|
In conclusion, investors have significant investing options with both Solana and Ethereum. Developers choose Solana because of its great scalability and quick transaction speeds, while investors prefer Ethereum because of the sizeable and well-established developer community and its dominant position in the dApp market. In the end, the decision between Solana and Ethereum will be based on your risk tolerance and investing objectives.