What is Solana?
Often dubbed the “Ethereum killer” during its early days, Solana was launched in 2020 by Anatoly Yakovenko as a high-performance blockchain. As Ethereum was overwhelmed by high gas fees, especially during the NFT boom, Solana was the competition, offering a faster and more cost-effective alternative. It quickly gained popularity, attracting a loyal following and hosting large-scale events attended by thousands of Solana Maxis aspirants.

What is Ethereum?
Launched by Vitalik Buterin in 2015, Ethereum is the original smart contract platform that revolutionized the blockchain by enabling decentralized applications (dApps). Positioned as the next step after Bitcoin, Ethereum quickly became the foundation for the thriving DeFi and NFT markets. Despite the launch of countless L1 competitors, Ethereum remains the most widely used blockchain, especially in large-scale institutional and financial applications.

After moving to a proof-of-stake (PoS) system in 2022, Ethereum is now focusing on scalability, particularly through Layer 2, and has become a leader in tokenizing real-world assets, cementing its position as the first layer of go-to for institutions. The biggest story of 2024 for Ethereum was the unexpected speed with which Ethereum exchange-traded funds (ETFs) were approved mid-year.

The best way to compare Solana and Ethereum is to look at their performance, both in terms of price action and on-chain data.

Price: SOL’s market cap is currently $70 billion, up 40.43% in 2024 and a significant 569.23% increase over the past year. In comparison, Ethereum’s market cap is $307 billion, up 9.84% year-to-date (YTD) and 46.70% over one year.
Total Value Locked (TVL): Ethereum dominates with $85.2 billion in TVL, largely driven by its DeFi protocols. That’s a 134.59% increase this year. Meanwhile, Solana, while smaller, has grown to a TVL of $10.1 billion, up 255.69% in 2024.
DEX Trading Volume: Solana has occasionally outperformed Ethereum in DEX trading volume, particularly due to meme coin trading. However, Ethereum generally has higher total trading volumes, recording $49.6 billion in August 2024, compared to Solana’s $35.5 billion.
Transactions: Ethereum and its L2s processed 0.81 billion transactions over the past three months, while Solana processed 3.56 billion transactions over the same period.
Fees and Revenue: Ethereum, which previously generated around $30 million in daily fees (90% of revenue), saw its revenue drop to $2 million per day after the Dencon upgrade in March 2024. Solana consistently generates between $0.5 million and $2 million in fees, sometimes surpassing Ethereum in daily revenue.
NFT Sales: Ethereum continues to dominate the NFT space, but Solana’s Magic Eden is also gaining traction. In 2024, NFT trading volumes fluctuated between $20 million and $160 million for Ethereum and $14 million to $68 million for Solana.

To combat any criticism. Solana has faced several setbacks, including network outages and failed transactions. However, current trends show that Solana is the preferred network for many accounts.

Meme Coins Solana is the preferred blockchain for creating meme coins, driven by token generators like Pump.fun and decentralized exchanges (DEXs) like Raydium.
DePin: Solana’s crypto mobile strategy makes it a leader in decentralized physical infrastructure networks (DePINs). This is led by the Saga smartphone, which has sold over 150,000 units, and the upcoming Chapter 2 phone, expected to launch in 2025.
E-commerce integrations: The Solana ecosystem has been further boosted by recent mainstream adoptions, such as PayPal launching its stablecoin, PYUSD, on Solana, Shopify integrating Solana Pay for online purchases, and Stripe using Solana for payments.
Potential Solana ETF: The SEC still views Solana as an over-the-counter security in the US, but the buzz around the potential approval of an ETF could push SOL’s price higher, thanks to asset managers like VanEck already filing for one.

Ethereum Ecosystem
Ethereum has shifted from its once-dominant focus on DeFi, especially after the Terra Luna collapse reduced interest in products yielding over 50% TVL. Recently, Vitalik Buterin has been critical of DeFi use cases within the Ethereum ecosystem.

Layer 2 Ethereum's layer 2 networks, including Arbitrum and Optimism, manage over $10 billion in TVL, addressing scalability issues while reducing transaction costs.
Re-custody: Projects like Lido, EigenLayer, and Ether.fi, which specialize in liquid custody, re-custody, and liquid re-custody, have raised $66 billion in TVL, accounting for nearly half of the global DeFi market.
ETFs: The SEC’s approval of Ethereum-based ETFs is expected to attract billions in institutional investment over the coming years.
RWA Tokenization: Ethereum is leading the charge in tokenizing real-world assets, a market backed by institutional giants like Larry Fink’s BlackRock.

Despite the declining focus on technology, understanding the distinct blockchain architectures of Solana and Ethereum is crucial. Solana’s homogeneous architecture combines Proof of History (PoH) and Proof of Stake (PoS), allowing it to achieve theoretical transaction speeds of up to 65,000 transactions per second (TPS). This setup is designed for high throughput and efficiency, but has faced concerns about network stability and centralization.

In contrast, Ethereum uses a modular PoS architecture, moving on from its previous Proof-of-Work system. This architecture is further supported by layer 2 blockchains like ZKsync and Starknet, which offload transactions from the main chain to enhance scalability and security. This modular approach allows Ethereum to maintain a balance between decentralization and performance.

SOL vs ETH Tokenomics
Solana operates on an inflationary token model, with approximately 466 million SOL currently in circulation out of a total supply of 583 million. The network’s inflation rate is designed to gradually decrease, settling at around 1.5% per year. Solana validators are incentivized with staking rewards that currently offer returns of around 6-7%. Additionally, around 50% of transaction fees are burned, helping to exert deflationary pressure over time.

Ethereum tokens have improved since the merge, with the introduction of EIP-1559, which burns a portion of transaction fees to reduce the total supply of Ethereum. This mechanism was intended to make Ethereum deflationary “like ultrasound money”; however, the network is currently slightly oversubscribed, with new issuance slightly outpacing the burn rate. The total supply of Ethereum is around 120 million, and the issuance rate is around 0.7% per year.

Conclusion
In 2024, Solana currently leads in hash adoption and fast transactions, while Ethereum remains the foundation for institutional applications, but trends could change at any time. For example, Solana could receive unexpected approvals from U.S. ETFs in 2025 or become the primary network for restaking (Solaire recently raised $12 million, while Renzo expanded RZO to Solana).

Similarly, despite the Ethereum Foundation currently distancing itself from DeFi, Ethereum’s dominance in DeFi remains strong, with protocols like Aave and MakerDAO (now Sky) making headlines once again. Ethereum ETFs may lag behind Bitcoin ETFs, but that could change quickly, sending Ethereum to new record highs.

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