Ethereum may be the undisputed king of smart contracts, but there is a strong contender: Solana. It promises to process transactions super-fast and at super-low cost.... Can Solana overtake Ethereum in 2024?
1. Decentralization vs. Centralization
One of the main points of debate between Ethereum and Solana concerns the issue of decentralization versus centralization. Ethereum is known for its high level of decentralization, with thousands of globally distributed nodes, which enhances its security, resistance to censorship, and the principle of decentralized trust, a core tenet of blockchain technology. Ethereum’s move to Proof-of-Stake (PoS) in Ethereum 2.0 aims to maintain and possibly enhance this decentralization, appealing to those who prefer the flexibility and security of the network. In contrast, Solana, while offering impressive transaction speeds and low costs, has faced criticism for being relatively more centralized. The network has fewer validators, and the high requirements to run a validator can limit participation, leading to a greater concentration of control over the network. Solana’s centralization has been linked to several network outages, raising concerns about its vulnerability to coordinated attacks or technical failures. This balance between Solana’s high throughput and Ethereum’s commitment to decentralization is often the basis of debate, with Solana attracting those who value performance, while Ethereum appeals to those who see decentralization as a core value of the blockchain.
2. Network activity and adoption
Ethereum Activity:
Ethereum has over 1 million active addresses per day, indicating strong usage and widespread adoption of the network.
It processes around 1.2 million transactions per day, reflecting its widespread use across decentralized applications (dApps), decentralized finance (DeFi), and non-fungible tokens (NFTs).
It has over 4,000 monthly active developers, the highest number of any blockchain, reflecting a strong developer community and continuous innovation.
Ethereum also accounts for 30% of all smart contracts deployed in the blockchain ecosystem.
Solana's increased activity:
Solana has around 250,000 daily active addresses, showing rapid growth but still much lower than Ethereum.
Solana processes over 65,000 transactions per second (TPS) and averages around 40 million transactions per day, demonstrating its high throughput.
3. Total Value Locked (TVL) in Decentralized Finance (DeFi)
Ethereum’s Dominance in DeFi:
Ethereum hosts the largest DeFi ecosystem with a value locked of over $25 billion as of 2024, representing about 60% of the total DeFi market.
Major DeFi projects like Uniswap, MakerDAO, and Aave are native to Ethereum, attracting liquidity and users to the network.
Solana DeFi Landscape:
Solana's locked value stands at around $600 million, a fraction of Ethereum's but showing growth potential, especially with liquid token solutions.
Solana's growth in locked value has been led by platforms like Marinade Finance and Raydium, but it still lacks the diversity and liquidity depth found on Ethereum.
4. Ecosystem and Developer Tools
As the Solana ecosystem expands and innovations like liquid tokens (like Binance’s BNSOL and Bybit’s bbSOL) join the memecoin revolution, many have begun to wonder:
The Ethereum Ecosystem:
Ethereum supports over 3,000 decentralized applications, including leading NFT marketplaces like OpenSea and major DeFi protocols.
Ethereum offers mature development tools, extensive documentation, and well-established infrastructure (e.g. MetaMask, Truffle, Infura) that simplify the development of decentralized applications.
Solana's Expanding Ecosystem:
Solana has over 500 decentralized applications, focusing on high-speed applications like gaming and high-frequency trading, attracting developers seeking performance.
The ecosystem is expanding, but it lacks the same level of mature developer tools and integrations available in the Ethereum system.
5. Security and reliability
Proven Security of Ethereum:
Ethereum has been operating since 2015 without major network outages, highlighting its reliability.
Its move to Proof-of-Stake (PoS) with Ethereum 2.0 aims to enhance security and energy efficiency while maintaining decentralization.
Solana Security Concerns:
Solana has suffered several network outages, most notably a 17-hour outage in 2022 due to transaction flow, raising concerns about its reliability.
While Solana's Proof of History (PoH) consensus is innovative, it is less tested compared to Ethereum's Proof of Stake and may face challenges in scaling safely.
6. Transaction costs and speed
Gas Fees and Scalability Solutions for Ethereum:
The average transaction fee for Ethereum is around $0.50, which has dropped significantly after the upgrade but can rise during high demand on the network.
Layer 2 solutions like Arbitrum and Optimism have emerged to address the issues of scalability and fees, providing cheaper and faster transactions.
Cost advantage of Solana:
Solana's average transaction fees are less than $0.001, making it very attractive for small transactions and applications that require high transaction throughput.
High processing speed of up to 65,000 TPS offers instant settlement at low fees, making it attractive to users looking for low-cost solutions.
7. Institutional adoption and investment
Institutional Trust in Ethereum:
Institutions favor Ethereum, with significant investments in Ethereum-based products, including Grayscale's Ethereum Trust and several exchange-traded funds.
Ethereum's regulatory clarity, platform-first advantage, and strong network effects make it the preferred choice for institutional adoption.
Institutional interest in Solana:
Solana has seen increasing interest, with investments from companies like Alameda Research and venture capital into Solana projects.
Although it is gaining momentum, Solana still lags behind Ethereum in terms of trust and institutional adoption.
8. Future expectations and promotions
Ethereum Roadmap:
The Ethereum roadmap includes ongoing improvements through Ethereum 2.0 upgrades, with future phases focused on improving scalability, privacy, and security.
Its commitment to innovation, such as sharding and EIP-4844 (Proto-Danishsharding), aims to reduce fees and increase transaction capacity.
Solana Development Plans:
Solana's future plans include enhancing the stability of the network, expanding through updates like Firedancer (a new verification client), and expanding its ecosystem with more DeFi and NFT projects.
Despite these plans, the Ethereum Roadmap provides a more robust and transparent path to address current limitations.
In my opinion, Saif Abusrour, Solana cannot surpass Ethereum. I believe that if the financial world decides in the future to list company shares on the blockchain, the obvious choice will be Ethereum. This is due to the high degree of security, reliability, and the ability of developers to scale the network significantly and efficiently, which makes it the best choice to support major financial systems. Ethereum to the Moon....
