Decentralized Finance (DeFi) has experienced a boom in recent years, growing exponentially since mid-2020. As it prepares to take on the centralized banking and finance sector, Two of the largest blockchains for decentralized activity and non-fungible tokens (NFTs), Ethereum (ETH) and Solana (SOL), face off to win the best altcoin trophy.
Both digital tokens have amassed a substantial valuation among the top cryptocurrencies, with various upgrades planned on their respective roadmaps. While Ethereum has been one of the oldest and most widely used blockchain platforms, it is the second most popular cryptocurrency after Bitcoin (BTC), Solana has been touted as the “Ethereum killer”, providing faster and better transactions for users. .
Let’s dig a little deeper to find out if Solana is better than Ethereum or the other way around.
MAIN DIFFERENCES BETWEEN SOLANA AND ETHEREUM
In the midst of a constant conflict for the title of the best altcoin, it is increasingly common to hear investors and developers weigh their options between Solana vs Ethereum. Although both Ethereum and Solana are powerful blockchains, each platform has some significant advantages, as well as disadvantages that help the platform stand out. In order to compare Solana vs Ethereum, we are going to segregate the two platforms under some basic characteristics.
Decentralization
Solana is a high-performance decentralized blockchain built with the goal of enabling scalability of decentralized applications (dApps). It is one of the fastest growing ecosystems in the world, with thousands of projects including DeFi, NFTs and Web3..
On the other hand, Ethereum has been one of the top leaders in terms of blockchain platforms, powering thousands of decentralized transactions. Ethereum is most popular in the decentralization category with over 2,900 dApps running on its platform.while Solana has about 350.
Processing speed
Ethereum can process approximately 13-15 transactions per second. However, there are several Ethereum scaling platforms, such as Polygon, that help increase the number of nodes in the network, improving the transaction load.
On the contrary, Solana, you do not need Layer-2 solutions to speed up your transactions. It uses a Turbine block propagation protocol that breaks data into smaller chunks, which in turn makes it easier to transfer data over the network. All this mechanism helps the blockchain to carry out a whopping 65,000 transactions per second..
transaction time
One of the main advantages of Solana compared to Ethereum is that it does not have a waiting period between the processing of a transaction and its confirmation on the blockchain.. While Solana transactions can be accepted almost instantly, Ethereum has a waiting period of about four to five minutes.
Since transactions require less processing time, Solana is a greener solution than the Ethereum blockchain, which consumes a lot of gas, which makes SOL’s efficiency even more attractive. The Solana blockchain has a block time of 0.4 seconds and a block size of 20,000 transactions, compared to Ethereum’s block time of 13 seconds and block size of just 70 transactions.
Commissions per transaction
Ethereum is infamous for its notoriously high gas rates compared to Solana. The fees for ETH transactions are quite high, since users have to pay between 2 and 6 dollars for a single transaction, depending on the network traffic.
On the contrary, one of the main advantages of Solana is its price, which offers a transaction fee of only $0.00025 per transaction. Solana is also the cheapest chain to leave NFT. For comparison, the cost of deploying smart contracts on Ethereum is around $5,000+, while on Solana it is barely $30.
Security
Security has been a major concern when it comes to cryptocurrencies, and it is a major consideration when comparing Solana and Ethereum. With the recent “Merge” software update, Ethereum Switched to Proof-of-Stake (PoS) Consensus which will be a financial incentive against the temptation to validate fraudulent transactions.
Solana, for its part, uses a Proof of History consensus mechanism. Although this mechanism allows for significantly faster processing speeds, those speeds come at a cost. Unfortunately, Proof of History does not offer the same level of security.
STAKING: SOLANA VS ETHEREUM. WHICH IS MORE PROFITABLE?
Staking is a process of “locking” a portion of a user’s cryptocurrency for a period of time as a way to contribute to the blockchain network.. In return, stakers can earn rewards, usually in the form of additional coins or tokens. Simply put, it is a way to earn passive income.
Ethereum (ETH) takes the trophy for the most staked cryptocurrency after the successful merger of the Beacon Chain consensus layer with the Ethereum execution layer in 2022. ETH staking returns on-chain currently sit around 4% APY. Hot on its heels is Solana (SOL), with the second-highest staking trading market capitalization at $12.7bn.
According to analytics firm Nansen, most of the currently staked ETH is not profitable at current Ethereum prices.
Meanwhile, Solana (SOL) offers delegated proof of stake where tokens are delegated to validators running nodes. Ethereum Killer staking has historically returned around 5.5% Annual Percentage Yield (APY). More than 16.5 million ether, worth $27.7 billion, have been staked since the Beacon Chain went live in December 2020, of which 31% or 5.115 million ETH are in profit , while the rest, 11,385 million ETH, are in losses.
WHICH ECOSYSTEM IS BEST FOR DEFI, SOLANA OR ETHEREUM?
Ethereum is hands down the reigning champion in this category, since its ecosystem has been expanding and maturing for years. With a large developer community, strong development tools and frameworks, Ethereum offers developers a wide range of options for building decentralized applications and smart contracts. It is home to some of the most innovative and successful blockchain projects such as Uniswap, Compound, and MakerDAO.
At the same time, Solana, has focused on attracting developers who want to build high-speed, high-performance applications such as DeFi and NFT. It has already established partnerships with various decentralized projects, such as Serum, Mango Markets, and Degenerate Ape Academy, which are attracting developers and users to its platform. Developers are starting to look at Solana’s unique features, such as its blazing speed of transactions and scalability.
In the NFT sector, Ethereum has continued to dominate, with OpenSea and Rarible being two of the most prominent NFT marketplaces. This platform has seen the rise of Axie Infinity and Gods Unchained. Uniswap and SushiSwap are two popular DEXs using Ethereum. Due to its smart contract capabilities and established ecosystem, it has become the platform of choice for creating Decentralized Exchanges (DEXs).
Besides, Solana has been gaining popularity as a platform for NFT markets and games. He has collaborated with various NFT initiatives, such as Degenerate Ape Academy, and gaming projects, such as Star Atlas, to provide consumers with unique gaming experiences. Solana is also rapidly gaining popularity as a DEX platform, with Serum being one of the most promising regimens.
SOL VS ETH: WHICH CRYPTOCURRENCY SHOULD I INVEST IN?
Both Ethereum and Solana can be excellent investment opportunities. However, it is difficult to compare the two cryptocurrencies or the two platforms and say definitively that one is better than the other. It is clear that both Ethereum and Solana have strong sales pitches.
Ethereum boasts long-term stability and security, along with its strong smart contract capabilities. It also has a higher trading price and more proven success as an investment. The Ethereum network is also preparing for its next big update, dubbed Shanghai, which aims to add new functionality. The software upgrade will separate the code from the data, helping Layer 2 to handle smart contract code easier and faster. This, in turn, will drive new smart contract functionalities that will further reduce gas fees.
Solana, for its part, has an advantage in terms of speed and scalability. Solana Mobile will soon be selling Solana’s new state-of-the-art phone, called Saga, which would come pre-installed with a dApp store. The dApp store would serve as a single hub through which users could access all the decentralized applications available on the Solana network. SOL’s recent rally came after Helium Network announced its migration to Solana. Solana also intends to improve its network by introducing new features, such as the Solana Wormhole, a cross-chain bridge, and by allowing more developers and projects to use its platform.
The Helium network is migrating from its current L1 to Solana at the end of March, bringing with nearly 1 million hotspots worldwide across the LoRa and 5G networks ????
— Solana (@solana) February 20, 2023
Although Ethereum has been on the market longer and has experienced explosive growth, Solana is not far behind and its prices have risen in recent days. What cryptocurrency to invest in right now? It depends on the investment style of each one. Investors looking for less risk may feel more comfortable choosing Ethereum, the market leader. But for those willing to take a little more risk, Solana might be the better bet.
In Summary: Comparative Table ETHEREUM VS SOLANA
| Ethereum (ETH) | Solana (SUN) | |
| Launch Date | July 30, 2015 | March 16, 2020 |
| Max. Token Supply | Infinite | Infinite |
| Consensus Mechanism | Proof-of-Stake (PoS) | Proof-of-History / Delegated Proof-of-Stake (PoS) |
| Transactions Fees | $2-$6 (depending on network traffic) | $0.00025 per transaction |
| Transactions Per Second | 15 | 65,000 |
| Programming Language | Solidity | Solana’s primary programming language is Rust, but C, C++, and even Python are supported. |
| Web |
Conclusion
It can be concluded that Ethereum has a dominant position in the DeFi and NFT market and that developers still prefer Ethereum. However, as cryptocurrency competition heats up, Solana has jumped on the popularity bandwagon in no time. Therefore, if someone is looking for the most reliable platform with security and features, it would be Ethereum. However, if it’s affordability and faster speeds you’re looking for, Solana is a better choice.
Crypto Economy only makes reviews and comparisons for informational purposes and should not be taken as investment advice. If you want to invest in cryptocurrencies, do so at your own risk and do your own research beforehand.