Warum gilt Solana als der Killer von Ethereum?

A few days ago, the Solana token managed to break the important psychological mark of $200, setting a new record of $214.96. Then the value of the token declined, but its uptrend is still in effect. We will try to figure out why this is happening and whether SOL can replace ETH.

A month ago, SOL barely exceeded $40 on the Huobi cryptocurrency exchange. However, the token made a rapid leap to the $80 level in less than a week, and by the end of August, it was trading above $120 per token. Even with the rapid drop in the price of the main crypto asset in the market, another jump soon took place, allowing SOL to test the $200 level by setting up a new ATH. After that, the coin sank in price, reaching the previous level of $180, and is now trading at $190,88 on Huobi again.

Thanks to dynamic growth, it managed to bypass the capitalization of the beloved “meme coin” of the DOGE community and the main lover of arguing with the SEC XRP. And if the capitalization of Dogecoin SOL confidently bypassed as much as 20 billion, then Ripple may well win back the advantage due to a small run-up. As its market cap, today is just over $51 billion, while Solana's market cap is slightly more at $53.3 billion.

Growth reasons

One of the first reasons for the growth is the increased attention from various funds investing in promising blockchain projects. Among them are Andreessen Horowitz and Polychain, from which Solana raised more than $314 million. Moreover, the investments were carried out through the purchase of project tokens, and not shares familiar to most of the institutions. The team uses this amount to develop its network in the decentralized finance industry.

The growth of the new direction of non-fungible tokens has also given a significant boost to SOL quotes. Along with the peak of public interest in NFT, one of the most profitable and successful NFT ideas based on Solana with the uncomplicated name Degenerate Apes was launched. In parallel with this, from the middle of August, the token began to grow with even greater strength.

In early September one of the largest exchanges FTX announced the opening of its own NFT marketplace based on the Solana-Ethereum cross-chain. The head of the exchange, Sam Bankman-Fried, said SOL's growth is quite organic, calling it Solana's “calling card”. In addition, he noted that the SOL team has already outstripped the marketing of its project by one or even one and a half years.

Not the least factor was the so-called “public pressure” when in August practically all the media began to trumpet the success of Solana everywhere. Search queries and Google Trends data immediately recorded a surge in activity in the search for options for buying Solana, its storage, and questions about the prospects of the blockchain, whose speed promises to be 6,000 times faster than Ethereum.

SOL vs ETH

The Solana blockchain is not so much striving to become a replacement for Ethereum, but rather an improved version of it, offering similar solutions, but working at a much higher speed and lower fees. For example, Port Finance competes with Aave, and Mercurial Finance is similar to Curve Finance on Ethereum. In addition, there is Radium, similar to one of the largest DEX Uniswap.

Solana also adheres to the PoS consensus just like Ethereum 2.0. But its key innovation was Proof-of-History (PoH), which solved the problem with finding incoming blocks of transactions, which had previously become a real thorn in PoS validators. In Solana, each of them has its own "clock" by which it checks the order of events and hashes the passage of time. The head of Solana, Anatoly Yakovenko, called this principle “a way to encode time as data”.

Solana does not need to wait for the block to fill. Instead of this lengthy process, it processes transactions as they come in. Thanks to this, SOL significantly benefits in terms of scalability and transaction processing speed from ETH.

In addition, one cannot fail to mention the Turbine block propagation protocol, which "breaks" data into bits, which are subsequently sent to nodes at a better speed, thereby increasing the network throughput. And also Tower BFT, complementing PoS in the role of the network “guard”.

In numbers, Ethereum is by far the most popular blockchain with 7,000 nodes and 90,000 validators versus 600 nodes and 1,000 validators on Solana's account. However, the latter guarantees the processing of up to 60,000 transactions per second, which is not able to offer not only Ethereum but also such technological giants of the market as Visa, Bitcoin, and Ripple combined.

In addition, problems with high-cost transactions have long become commonplace for ETH users. At critical moments, on-chain fees exceeded $65, not to mention absurd cases like the $9,500 fees paid last year by one of the crypto community members for exchanging 120 for Uniswap. On the Solana network, the average commission will be $0.00025 per transaction, which is hundreds or even thousands of times lower than the “generous” offer from Ethereum.

Considering Moore's Law, according to which the Solana blockchain will only get better as time goes on, the threat of Ethereum 2.0, with its potential 100,000 transactions per second, no longer looks so scary.

Solana is one of the products of the crypto industry, initially focused on the future in the foreseeable future, so the peak of its popularity has not just passed, but only ahead!

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