These days, the rest of the world and the more (formerly-skeptical) mainstream audiences are starting to see the light and warm up to the blockchain. Yet, just as millions are pouring into this new age of decentralization, we're also starting to test that upper limit of what blockchains can process. As a piece of computing software, we're just about to reach the breaking point… Or at least that's what we thought before our with our Solana vs Ethereum guide.
Everyone knows who and what Ethereum is by now. Bitcoin may be golden, but Ethereum is by far the workhorse that humankind needs, bringing and popularizing the blockchain gospel to the masses. Think of a decentralized platform or service that you last used, and it's very likely that Ethereum's blockchain is powering it. However, as it burgeons ever larger, it might've gotten just a bit too porky. In short, Ethereum just isn't as fast as it used – and is needed – to be.
Perhaps then, that's where Solana comes to the rescue. While Ethereum is slowly lumbering along, buckling under its own weight, Solana has built a plucky and innovative blockchain that brings speeds and efficiency that even the younger and lightweight Ethereum could only ever dream of. Will Solana finally solve the challenges that blockchains – not just Ethereum – all face? Well, read along our Solana vs Ethereum guide to know if it will finally get the chance it deserves.
Solana vs Ethereum – Comparison Table
|Ranking: 2||Ranking: 25|
|Network Fees: Moderate to High||Network Fees: Low|
|Market Capitalization: $231,122,371,159||Market Capitalization: $5,096,533,819|
|Circulating Token Supply: 115,289,347 ETH||Circulating Token Supply: 268,150,589|
|Transaction Speeds: Up to 50,000 TPS in current iteration (65,000+ TPS under optimised conditions)||Transaction Speeds: Up to 30 TPS, though often 15 TPS (Potential for 100,000 TPS with ETH2.0 update)|
Solana vs Ethereum – Main Differences
As far as similarities go in comparing Solana vs Ethereum, they are both decentralized, open-source, public blockchain protocols that are highly modular and programmable to fit a large subset of different applications. But where they differ greatly is in their performance and the overall scalability potential for either chain. Ethereum is the dominant leader in blockchain adoption worldwide, with its underlying blockchain forming to core foundations to many decentralized applications and networks in use today.
Many networks within rapidly growing sectors of the blockchain space, such as decentralized finance (DeFi) and non-fungible tokens (NFTs), are heavily entrenched with integrating Ethereum. However, while they continue to have a massive reach within the wider blockchain industry, it continues to lag behind in terms of speed owing to the limits of their current scaling abilities. Ethereum is suffering from crippling network congestion and thus slow processing times.
This has also resulted in users needing to cough up a lot to pay for gas fees, even for just the simplest of transactions. Comparatively, Solana is designed to be a high-performance blockchain, with the ability to handle far more computational power than Ethereum, and has a lot of room to scale infinitely without sacrificing either security or decentralization. Its innovative blockchain architecture is even able to do this without sharding or needing to implement Layer 2 solutions.
What Is Solana?
Solana is an open-source, permission-less, wholly decentralized, and high-performance single-layer blockchain protocol. Solana's primary goal is to build a blockchain that could very easily facilitate and power much of the world's mainstream and centralized services and support the information processing abilities they need. They compute large streams of data that could otherwise not be able to efficiently process on many blockchains today, aside from Solana.
Yet, they could accomplish these blazing speeds – as we'll learn more in our Solana vs Ethereum comparison – while ensuring robust security, decentralized network governance, and low fees. The open-source project is maintained by the Solana Foundation, based in Geneva, Switzerland. Meanwhile, Solana's development team hails from some of the world's most respected tech companies and academic institutions, including but not limited to Google, Qualcomm, Intel, Apple, Microsoft, CERN, and Dropbox.
What Are Solana's Unique Features and Innovations?
Overall, we can say that in a fight between Solana vs Ethereum, the former of the two has the upper hand when it comes to bleeding-edge technologies and innovation. Solana's blockchain boasts high throughput speeds, huge scalability potential while offering very low fees. How much can it scale, and how little does it charge, you might ask? Well, Solana's blockchain – in its current, still relatively new state – can process more than 50,000 transactions every second (TPS).
Under more optimized conditions, it could even handle over 65,000 TPS, all with a very low block-timing of just 400ms and with equally low network fees of around $0.00001 for each transaction. Impressively, Solana is able to accomplish all this on a single-layer blockchain, which affords better composability for projects and decentralized apps (dApps) running on its network, without developers having to integrate sharding mechanisms or Layer 2 scaling solutions.
Solana is theoretically claimed to be infinitely scalable, in following along Moore's Law that could allow Solana's blockchain to double in capacity every 2 years. The key innovation here is the integration of a unique and ground-breaking Proof-of-History (PoH) consensus algorithm, which has enabled its blockchain to scale easily while also running smoothly and quickly, which sits alongside Solana's delegated-Proof-of-Stake (dPoS) model.
How Can Solana's Revolutionary Blockchain Promise Speed and Scale?
So, how does Proof-of-History (PoH) even work? In short, PoH solves the main challenge of decentralized networks, in that it can be difficult to find an agreement on the specific time and place where transactions happen. Solana's implementation of PoH is essentially a decentralized “clock” and works the same way within Solana just as how the invention of early time-zones led to the birth of modern rail travel, as it also contributed to a decline in railway accidents while also guaranteeing that trains always arrive and leave on time.
Following that metaphor, Solana's PoH allows each network node (and there are 689 global node validators on their blockchain, at the time of writing this Solana vs Ethereum review) to issue locally-generated timestamps, which are all encrypted through SHA256. This creates a chain-wide synchronized and agreeable “clock” across the entire network. This distribution of uniform timestamps has allowed the processing of data and transactions to be far more efficient.
The benefits go two ways. Firstly, this guarantees that Solana's blockchain can maintain its decentralized governance better than other dPoS chains while also making it harder for ASICs to “attack” the Solana blockchain. Secondly, this processing efficiency, thanks to PoH, has meant that Solana can compute transactions faster (read: higher TPS) while also making it so that it can scale more effectively once more projects are onboarded onto the Solana blockchain.
Any Other Innovative and Novel Solutions Built by Solana?
When deployed at a larger scale, the implementation of Solana's PoH works hand-in-hand with some other important solutions built into Solana's blockchain. Ultimately, these added bonus features will better enable the Solana blockchain to perform at its fastest and most optimized state. Here are some examples of key innovations designed by Solana for our Solana vs Ethereum comparison:
- Tower Byzantine Fault Tolerance (BFT) consensus mechanism – Solana has built a PoH-optimised version of the traditional byzantine fault tolerance system. It uses Solana's synchronized clock before consensus voting to reduce the overhead and latency for communication and chain-wide coordination. Once validators agree on voting for an order of transactions, it will become canonicalized and cannot be rolled back.
- Turbine – Solana adopts a unique block propagation protocol called “Turbine,” which can support a higher number of nodes operating on its blockchain without affecting performance. To better optimize the network, instead of one node transmitting data in full to other nodes, the data would be broken up into smaller packets. It would then transmit those packets to each validator, which will then pass them to a group of other nodes at once. This allows for blocks of data to be reconstructed quickly, even with just a partial packet.
- Gulf Stream – Solana uses “Gulf Stream” as a Mempool-less transaction forwarding protocol, which allows for node validators the ability to execute transactions faster, further reducing confirmation times across the blockchain while also reducing the memory bandwidth for validators.
- Sealevel – Solana's integration of “Sealevel” makes it the world's first instance of parallel smart-contracts execution. It supports the ability of parallel execution of transactions within Solana's single-layer blockchain. Sealevel finds all non-overlapping transactions within a block and executes them in parallel to further optimize performance on the blockchain.
- Pipeline – “Pipeline” is Solana's transaction processing unit for data validation. It uses an optimization mechanism in CPU design known as ‘pipelining,' where data needs to be verified based on a sequence of steps, with differing hardware to manage each one. This allows data validation to be done more efficiently and makes greater use of available hardware.
- Cloudbreak – Solana's “Cloudbreak” is used within the blockchain to solve the issue of keeping track of accounts on a distributed network without a loss in on-chain performance due to a lack of memory size or limited access speeds. Cloudbreak uses concurred reads and writes across a RAID 0n storage configuration on solid-state drives (SSDs) for the best performance.
- Archivers – Data storage on the Solana blockchain is offloaded from validators to a network of nodes called “Archivers.” Any data that's already been processed is distributed and dispersed between the nodes, ensuring greater security within the network and that all on-chain data is stored within a completely decentralized ledger.
What Are Solana's SOL Cryptocurrency Tokens?
The native cryptocurrency within the Solana ecosystem is its SOL tokens. Solana's SOL cryptocurrencies can be used as a utility token to settle for on-chain fees or to pay for transactions. But as we learned earlier in our Solana vs Ethereum comparison, Solana's blockchain is efficient enough that fees are often negligible compared to other chains. Otherwise, holders of SOL cryptocurrencies can choose to stake their tokens to help power Solana's blockchain.
By helping to power on-chain transactions and validating data, stakers can ultimately become full node validators. Either way, staking can allow SOL token holders to earn incentives from operations across the wider Solana blockchain, such as being rewarded a portion of all transaction fees, gain newly minted Solana tokens, and more. As part of a community-proposed update on December 2020, Solana has now implemented a new token inflation rate of 0.1% annually.
This “pico-inflation” is only a temporary measure, however. The fairly low inflation rate is planned to be replaced with a more dramatic overhaul of Solana's tokenomics that can best fit its ecosystem as it grows. This should be implemented sometime in 2021. Solana's new inflation model will see SOL tokens inflate at a rate of 8% initially before gradually dropping every year until its inflation rate will fall to a minimum of 1.5% by 2031.
As many developers are now flocking away from Ethereum and onto alternative, more scalable blockchains, Solana has gained quite a fair amount of traction. This is reflected in its price, as Solana has grown substantially, from just over $1 throughout 2020 to $19.01 as of this Solana vs Ethereum review. With a circulating supply of 268,150,589 SOL, this has put a market capitalization value of $5,096,533,819 for Solana, making its SOL tokens the 25th-most valuable cryptocurrency.
What Does Solana's Future Look Like?
Another major advantage of Solana compared to Ethereum is that developers can program new dApps or smart contracts on Solana based on popular mainstream coding languages, instead of having to learn a new programming architecture like Ethereum's Solidity. This has allowed Solana to see increased interest from more platforms, especially those building new DeFi protocols and Web3 services. Solana has also become the basis for new blockchain games, such as Star Atlas.
Decentralized finance has undergone a lot of growth recently. Although most of the major networks are still powered by Ethereum, Solana-based alternatives are still proving to be quite popular. Examples include the Serum decentralized exchange (DEX), DeFi savings and lending with Anchor, or Solrise Finance's decentralized fund management platform. While writing this Solana vs Ethereum review, we've not been able to find a set roadmap or timeline for future updates.
However, Solana does have some exciting upgrades coming along. This includes Wormhole, which aims to widen the usability of Solana's blockchain, especially within the DeFi space. Solana's Wormhole will be a cross-chain, interoperable bridge that enables users to easily transfer tokenized digital assets between Solana and onto other blockchains, such as Ethereum. This means that DeFi platforms can take advantage of Solana's high-speed, low-cost, and scalable blockchain without actually having to port their entire protocol onto Solana.
Solana vs Ethereum – Solana Review
As we end this first half of our Solana vs Ethereum review, we can conclude quite simply that Solana's blockchain shows us quite clearly how a seemingly far-flung future can be like in the here and now. No more bottlenecks. No more high gas fees. No more waiting. Solana's innovative approach to building its blockchain infrastructure has proven to us that the new dawn of super-fast, immensely scalable, low fee, secure, and accessible blockchain is ripe for the picking… Even if it may be a league or two behind Ethereum when it comes to mass adoption.
What Is Ethereum?
Solana may lead far ahead of Ethereum as a technological tour de force, but Ethereum continues to reign supreme when it comes to market share and exposure across the blockchain industry. As we hinted at earlier in our Solana vs Ethereum review, Ethereum's blockchain is still the top choice when it comes to building and deploying decentralized applications (dApps) or creating and executing smart contracts. In that sense, Ethereum is as ubiquitous within the blockchain space, just as how Windows or Android is as operating systems.
A lot of other, both centralized and decentralized projects were built on Ethereum, and we have seen a lot of growth from the blockchain space that is helped thanks to Ethereum-built networks. Among those market segments that are dominated by Ethereum include the rise and popularity of NFTs (non-fungible tokens), the advent of equitable and accessible banking services made possible by decentralized finance (DeFi), creation of Web3 platforms blockchain-powered gaming, and more.
What Can You Do With Ethereum?
Ethereum was the first major 2nd-generation blockchain to have been launched back in 2013, with its ability to create dApps and power smart contracts. Plenty of protocols are using Ethereum thanks to its modularity and how its blockchain can be reconfigured and redesigned to fit any application or use. This is despite Ethereum continually suffering from heavy network congestion and sky-high gas fees, in that you can practically build anything on Ethereum.
As we learned earlier while looking at Solana vs Ethereum, this is Ethereum's specialty. Technologically, Ethereum may not (yet) be as fast, accessible, efficient, or as scalable as Solana or other competing chains such as Binance Smart Chain, Cardano, or Polkadot. It is Ethereum's immense versatility is what makes it a very compelling choice for any developer. Here are some examples for our Solana vs Ethereum comparison…
Create Your Own Cryptocurrencies or Leverage Ethereum's Monetary System
One of the best features of Ethereum's blockchain is how its on-chain economics are designed and how developers can leverage that for whatever dApp or smart contract they might want to make. Ethereum's natively-built monetary functionality – and we're not talking about Ether – have allowed for the many protocols built on Ethereum to have their own special home-grown cryptocurrencies, helped further by Ethereum's token standardization model.
The most popular token standard is ERC-20. This is the prime choice for many applications built on Ethereum, as we've seen a huge chunk of ICOs that were offered which was built as an ERC-20 token. ERC-20 cryptocurrencies can be used as a utility token to access or pay for features within the chain or be used as a governance tool. The rise of NFTs has also meant that Ethereum has also been hard at work to create other token templates to build with.
Widely used ones include those tokens built atop ERC-721 or ERC-1155 standards. The latter can allow for fungible and semi-fungible tokens to be created. Other types of tokens include ERC-223, ERC-777, ERC-1337, and more. Compared to other blockchains like Solana, this is a big bonus for Ethereum, as Ethereum-powered protocols can easily issue their own cryptocurrencies, leverage Ethereum's own economics, or build entirely new sub-economies for their project.
Use Decentralized Financial Services Thanks to DeFi.
Although Solana is working hard to cater to DeFi platforms, Ethereum is still the king of the hill. At the time of writing this Solana vs Ethereum review, DefiPulse has noted that the total valued locked (TVL) within DeFi projects is currently standing at more than $45-billion. Many of the top DeFi platforms are built on and powered by Ethereum and are actively leveraging Ethereum's dApp creation toolkit and smart-contracts execution.
Ethereum is, therefore, the key foundation for a lot of DeFi platforms offering a huge number of financial and banking-like services across a large number of sectors, including exchanges or decentralized exchanges (DEX), derivatives trading, lending and borrowing, token swaps, prediction markets, investment and hedging applications, wealth and asset management, crowdfunding, payments solutions, synthetic assets creation, options trading, and a lot more.
The end goal with decentralized finance is to provide fair, equitable, efficient, secure, affordable, and transparent access to financial services for everyone as an alternative to traditional banking. Just to prove how impressive Ethereum's blockchain is for monetary and financial functions compared to practically every other blockchain is how Ethereum is also the primary blockchain provider to many popular stablecoins in use today.
Collect Non-Fungible Tokens and Enjoy Blockchain Gaming
Aside from the more serious applications, Ethereum's blockchain has been widely adopted for the issuance of non-fungible tokens, or NFTs. The tokenization of both virtual and real-world assets is rapidly becoming a growing phenomenon, where creators and users can exchange digital-native goods that have immutability and verifiable proof of authenticity. An added upside of NFTs is that it enables digitalized goods to have tangible real-world value.
NFTs can include playing cards, rare collectibles, artwork, merchandise, music, writings, memorabilia, fashion, in-game items, as well as anything else that can be “minted” onto the Ethereum blockchain. Solana hasn't yet warmed up to NFTs, although Ethereum is under increased competition from other NFT-focused rivals like WAX. Nevertheless, Ethereum is still at the top as far as NFTs are concerned, with NFTs on some Ethereum-powered marketplaces selling for tens of millions apiece.
Ethereum's blockchain has also made its way to the world of gaming. Ethereum's ecosystem has allowed for game developers to create new completely decentralized gaming environments for its players, which also introduced new mechanics such as a provably fair random number generator (RNG). NFTs also have a part to play in this by enhancing and bringing better value to those in-game economies, with items and inventories that can bring value to the player in the real world.
What Are Ethereum's Ether Cryptocurrency Tokens?
Ethereum's native cryptocurrency within its blockchain ecosystem is Ether or ETH. Since Ethereum is home to many dApps, ETH is a popular medium for payments or transactions within those dApps, such as buying an NFT-minted asset or using ETH as collateral for a DeFi lending service, as well as being accepted as a legal tender for payments outside of its blockchain. Otherwise, ETH tokens are used within the blockchain to pay for network resources in the form of “gas.”
Ether is mostly spent on gas fees, which are the transactional costs incurred for every action done through its blockchain. Compared to Solana's highly scalable blockchain, Ethereum's limited bandwidth has led to heavy network usage, which is also causing increased volatility and costs for those gas fees. Ethereum doesn't have a total Ether supply cap. As a Proof-of-Work (PoW) blockchain, Ethereum has a fixed emissions rate for its block rewards that are mined.
Owing to how important Ethereum is for the continued growth, prosperity, and wider adoption of blockchain technology, its native ETH tokens have seen a lot of growth as of late. While writing this Solana vs Ethereum comparison, one ETH is worth $2,004.52. Based on the total circulation of 115,300,657 ETH cryptocurrencies today, this gives Ethereum a market capitalization value of $231,122,371,159. This makes Ethereum's Ether the 2nd-most valuable cryptocurrency, just behind Bitcoin.
What Are Ethereum's Future Roadmap Updates?
As of this Solana vs Ethereum overview, the most anticipated network update is the upcoming arrival of Ethereum 2.0, or ETH2.0. This should introduce changes to solve many of the key limitations with Ethereum today and bring it on par with the recent crop of new chains such as Solana. The ETH2.0 update will help to prepare Ethereum for increased adoption from the mainstream that requires high computational speeds, as well as give more room for existing protocols to grow.
Compared to blockchains, Ethereum's high gas fees are a running joke. As such, they're now working to implement a temporary stop-gap measure while ETH2.0 is being finalized in the form of the EIP-1559 update. This will have massive improvements and a complete review of the fee structure that will also burn Ether tokens used to pay gas fees. This would not only make gas fees cheaper to pay but might also result in an appreciation of Ether owing to increased scarcity.
For ETH2.0, there will be an overhaul of the sharding mechanism of Ethereum's blockchain. This will divide the data being transaction across the blockchain into smaller batches, which would result in making transactions far more efficient and optimized for a wider group of applications, especially those that require a massive influx or outflow of data. ETH2.0 will also (finally) mark Ethereum's transition into adopting a Proof-of-Stake (PoS) consensus algorithm.
This means that the computational resources needed to power Ethereum will be much less complex and not as intensive while also be being cheaper and substantially more energy-efficient compared to its current iteration. In closing the gap with other highly scalable blockchains such as Solana – which is capable of processing thousands of transactions per second – ETH2.0 will enable Ethereum to compute with higher throughput speeds, with potential speeds upwards of 100,000 TPS.
Solana vs Ethereum – Ethereum Review
Ending this second half of our Solana vs Ethereum review, we can see more clearly that the darling of the blockchain world is falling quite far behind in terms of scaling to meet demand. Ironically, the massive growth that Ethereum themselves helped to build and catalyze is the main thing holding it back. That said, Ethereum is “the world's computer” for a good reason, as without them, many decentralized protocols today would simply no longer be able to exist, despite its crushing flaws.
Solana vs Ethereum – Final Conclusion
We're now at the end of our little comparison here, and it won't be a fair battle if we didn't proclaim a winner between Solana vs Ethereum. So, which one comes out on top… A member of the old guard, or the young'un of the blockchain community. Frankly, it's not easy to pick a winner between these two. In a perfect world, we'd have a hybrid of both Solana and Ethereum. But in this reality, we'll name Ethereum as our winner. But only just.
Ethereum remains the top dog of the blockchain world, and there's little to suggest that this hierarchy might change anytime soon. Although there have been many compelling blockchains to come along – and no doubt they'll be able to reach greatness on their own – Ethereum is practically the blockchain equivalent of “too big to fail.” It's integral to the survival of the blockchain, and we have much to thank for its continued richness and diversity that we enjoy today because of Ethereum.
But we're only calling Ethereum the champion amongst Solana vs Ethereum because we're compelled to name a victor. Solana's future is just as bright, and they have grown in a short period of time from strength to strength. They still have a ways to go, but it's their innovative blockchain, and breakthrough technologies are what make Solana very special. Solana shows us a preview of a future where blockchains are fast, cheap, secure, and accessible, but one that exists today. Long story short, we can't wait to see what Solana will be up to next.