Solana became one of the stars of cryptocurrency in 2021, climbing a jaw-dropping 3700% at its peak before struggling with a correction across the market.
At the heart of Solana’s rise is its unparalleled utility, posing a direct threat to the dominance of the Ethereum blockchain network, which has long been the go-to place for developers to launch decentralized finance (DeFi) projects and applications.
But can Solana surpass Ethereum as the number one DApp blockchain? It is possible, yes, for the following five reasons.
Solana vs. Ethereum Price
The drastic correction in 2022 caused Solana and Ethereum’s networks to plummet, with SOL pulling back about 95% and ETH pulling 75% from their respective all-time highs.
As CoinGecko data shows, SOL’s deeper pullback is largely attributed to the size of its 2021 price increases. Buoyed by many influential cheerleaders, SOL soared from $1.54 on December 31, 2020 to a peak of $259.96 before November 4, 2021; All thought it was an extraordinary rally.
At the heart of investors’ interest in SOL is Solana’s powerful blockchain, which makes the network an excellent space to buy and sell NFTs, as well as host other high-quality Dapps.
It is this level of utility that has led some commentators to refer to Solana as an “Ethereum killer”, but is that really the case? Let’s look at five reasons why Solana can surpass Ethereum to become the king of NFTs.
5 reasons why Solana can surpass Ethereum
Launched in early 2020 by two former Qualcomm engineers, Solana has a fast and low-cost blockchain that is perfect for many DeFi platforms and Dapps, including NFT marketplaces.
Notably, Solana has a “proof of history” consensus that establishes the order of transactions. Instead of relying on validators to confirm transaction timing, Proof of History can provide developers and validators with more security and flexibility to speed up transactions.
In addition, Solana leverages Cloudbreak as a form of distributed archiving that prevents transaction history from taking up a lot of computing space and slowing down the network.
Built with functionality in mind, Solana is not designed to be a store of wealth like Bitcoin, but to help the cryptocurrency ecosystem thrive faster than Ethereum allows. But is this enough to overturn Ethereum’s dominance in DeFi?
1. Revolutionary history proves consensus
As we mentioned already, Solana’s history proves that consensus is the most advanced in the cryptocurrency space, and this approach has earned the network a large number of admirers across the ecosystem.
This is because many programmable blockchains like Ethereum rely on external programs to add a “median” timestamp to transactions to verify the order in which they were received.
Solana argues that this incorporates unnecessary levels of centralization in a system that should be fully decentralized (although there are still valid questions about the decentralized structure of SOL itself). It is through the revolutionary Proof of History consensus that SOLANA can put these timestamps in the blockchain itself via a variable delay function (VDF).
“Every block producer has to pass the VDF, this historical proof, to get to their designated location and produce a block,” explains Anatoly Yakovenko, co-founder of Solana Labs, adding that this approach “gives the ledger this interesting property, and when you examine it, you can infer when the event occurred.”
2. Fast transactions
One of Solana’s main advantages over Ethereum is that it has no waiting period between processing a transaction and confirming it on the blockchain. While Solana transactions can be accepted almost instantaneously, the waiting period for Ethereum typically spans around 4 minutes.
Since transactions take less time to process, SOLana is a more environmentally friendly solution compared to Ethereum’s gas-draining blockchain, making SOL more efficient than its predecessor.
Both NFT creators and buyers were attracted to faster transaction times and the appeal of a more responsive market, which played a major role in SOLana’s NFT trading volume surpassing Ethereum for the first time in May 2022.
3. Minimal Transaction Fees
Speaking of Ethereum’s high oil consumption, processing transactions on its crowded network requires high fees, with fees per transaction potentially fluctuating by more than $100. Additionally, the purchase of a single NFT can cost the buyer up to $250 to make the transaction a success. The more complex transactions on the Ethereum blockchain, the higher the cost.
As the cryptocurrency ecosystem cooled down in 2022 and the launch of Ethereum 2.0, Ethereum’s gas price has fallen. However, they still don’t come close to the ultra-low cost of Solana, which costs an average of $0.00025 per transaction.
These relatively insignificant fees allow NFT collectors to pay for the artwork and collectibles they want without losing money by pushing the deal itself.
4. Solana is gaining momentum over Ethereum
Another key factor in Solana’s overtaking of Ethereum is the massive level of momentum generated by the network and its native cryptocurrency, SOL. In the five weeks following Solana’s launch, from August 1 to September 7, 2020, SOL rallied approximately 428.32%. At its peak in November 2021, SOLana had a market capitalization of $63 billion, making the cryptocurrency a major player in the top 10 based on market capitalization. This rise is a strong trust in SOLANA’s underlying technical framework. While SOL has struggled with the broader market downturn, momentum in the next bull market may once again flow to SOLANA rather than dwelling on old favorites like Ethereum.
5. Superior Utility
Finally, Solana describes itself as “Web3 infrastructure accessible to everyone,” and its basic data shows that this is likely to become true as the next generation of the internet continues to evolve.
Currently, more than 21 million NFTs have been minted on Solana’s network, and more than 125 billion transactions have taken place on its blockchain, all on a platform that did not exist until 2020.
Despite being hit hard by widespread market turmoil, Solana remains a leading star when it comes to bringing greater utility and flexibility to the cryptocurrency space, and it is likely to be the undisputed leader when it comes to buying, selling, and minting non-fungible tokens.
Can Solana’s NFTs surpass Ethereum?
For Solana, there are certainly some caveats, its network has always been vulnerable to security breaches, and new adversaries are continuing to emerge as contenders. However, the utility of its blockchain is beyond doubt.
Ethereum is still the star of DeFi for now, but the collapse of major cryptocurrency markets and a cryptocurrency winter like the one we are experiencing today can spawn new and valuable projects. Should the NFT landscape use the downturn to reconsider their allegiances to Ethereum, we may well see a new spell of dominance for Solana emerging in 2023 and beyond.
