Ethereum vs Solana: Battle For Layer-1 Supremacy

Ethereum and Solana have garnered significant attention in the crypto space. Ethereum is already the leading DeFi and smart contract platform and is transitioning into Ethereum 2.0, which is set to make the network more scalable, sustainable and secure once the transition Proof-of-Stake is complete.

Solana was created in 2017 as a high-speed layer-1 blockchain protocol that utilizes a unique consensus mechanism allowing it to process transactions almost instantly. Solana improves on Ethereum’s shortcomings, addressing the issues of transaction speeds and scalability, earning it the moniker of “Ethereum Killer.”

Ethereum vs Solana: The Beginning

Ethereum founder Vitalik Buterin first described Ethereum in a 2013 whitepaper and secured funding for the project in 2014 through an online public crowd sale. The blockchain was officially launched on 30th July 2015 as a barebone implementation called Frontier. Ethereum has since seen several upgrades and updates, with notable updates being “Constantinople,” “Istanbul,” “Muir Glacier,” and the “London” hard fork. 

Solana was created specifically to address the shortcomings of Ethereum, focusing on scalability and throughput. It is a high-performance blockchain utilizing a multi-layered consensus mechanism to eliminate the problem of bottlenecks. Solana was founded by Anatoly Yakovenko, who started working on the project in 2017. Along with Greg Fritzgerald, Yakovenko founded Solana Labs, ultimately releasing the blockchain and the SOL token in 2020.

Also read: Bitcoin vs Ethereum: Which is a Better Investment?

Ethereum vs Solana: The Technology

Ethereum uses the same underlying blockchain technology that powers Bitcoin, modifying the technology to add further applications beyond just the transfer of value from one user to another. It has also pioneered smart contracts, allowing users to digitize interactions between two parties. Smart contracts are self-executable and execute when conditions specified in the contract are met. Ethereum also has a thriving ecosystem of decentralized applications (dApps) and decentralized finance (DeFi). At the heart of Ethereum’s ecosystem is the Ethereum Virtual Machine, enabling the deployment and execution of smart contracts, which require a state update.

Solana’s Proof-of-History protocol is changing how blockchains function, simplifying and reducing the transaction verification process, and significantly increasing the transactions per second that Solana can process. In addition to Proof-of-History, Solana has created several key technologies that help it achieve significant scalability and high throughput. These features are Tower BFT, Turbine, Gulf Stream, Sealevel, Pipeline, Cloudbreak, Archivers, and Clusters.

Also read: Ethereum vs Cardano: The Smart Contract Platform Showdown

Currently, Ethereum uses a Proof-of-Work consensus mechanism called the Ethash algorithm. However, Ethereum is moving away from the current consensus mechanism, transitioning to a Proof-of-Stake consensus mechanism with the Ethereum 2.0 update. The shift will be completed by implementing the Casper Protocol

Solana’s multi-layered consensus system is unique, using a Proof-of-Stake and Proof-of-History consensus system. Proof-of-Stake validates the state of the blockchain, allowing users to earn rewards by becoming validators. Proof-of-History leverages a timestamp system that acts as a clock for events on the blockchain, creating a record that cryptographically proves that an event occurred at a specific time.

Also read: What Is Ethereum 2.0? A Primer

Ethereum vs Solana: Tokenomics

ETH is the native token of the Ethereum blockchain. Currently, there are 119,619,433 ETH in circulation, but with the implementation of EIP 1559, Ethereum introduced a base fee for transactions for them to be included in the next block. The base fee for the transactions is burned, meaning an increase in activity on the network would result in more ETH being burned, leading to an appreciation in the price of ETH, making ETH a deflationary asset in the long run.

The native token of Solana is SOL. According to the Solana Foundation, there is a total supply of 511,616,946 SOL, out of which 319,526,198 SOL are in circulation. The SOL token has several use cases such as transfer of value, payment of transaction fees, and staking. It can also serve as a governance token, allowing users to vote on critical matters related to the protocol. Solana burns 50% of the SOL in each transaction fee as part of its deflationary model.

Also read: Ethereum vs EOS: Battle Of The Smart Contract Platforms

Ethereum vs Solana: DeFi TVL

Ethereum is the leading DeFi blockchain, with most DeFi projects running on Ethereum. Prominent DeFi protocols on Ethereum include the likes of AAVE, Curve, MakerDAO, Uniswap, and several others. Currently, the TVL of DeFi on Ethereum is at $117.2 billion, a drop from its peak of $164.2 billion in November 2021.

ethereum vs solanaImage Credit: Defillama 

The total DeFi TVL on Solana had hit a high of $15 billion in November 2021, according to data from Defillama, but has seen a fairly significant drop, with its current DeFi TVL at $7.58 billion as of writing. Solana’s recent troubles, when the network went offline for 24 hours, affecting thousands of users and suffered a DDoS attack twice, seemed to have had a negative effect.

ethereum vs solanaImage Credit: Defillama

Ethereum vs Solana: NFTs 

Just as in DeFi, Ethereum is at the head of the table when it comes to NFTs, being the most widely used blockchain for NFT projects. Ethereum has pioneered the ERC-721 token standard, used to create NFTs, and the ERC-1155, used to create semi-fungible tokens. As we can see from the chart, Ethereum has a total volume of $19.6 billion.

ethereum vs solanaImage Credit: Defillama 

Despite its fairly recent launch, Solana already has several popular NFT projects such as Degenerate Ape Academy, SolPunks, Solana Monkey Business, Frakt, and several others. Solana boasts a total volume of $115.87 million, with a daily volume of $42,95,743.

ethereum vs solanaImage Credit: Defillama 

Ethereum vs Solana: Direct Comparison 

Ethereum  Solana 
Founders Vitalik Buterin and Ethereum Foundation Anatoly Yakovenko and Sol Labs
Token ETH SOL
Consensus Mechanism Proof-of-Work but will transition to Proof-of-Stake with Ethereum 2.0 Combination of Proof-of-Stake and Proof-of-History 
DeFi TVL  $117.2 billion  $7.58 billion
NFT Total Volume $19.6 billion ~$43 million
Transactions per second Upto 15-30 TPS  Upto 65,000 TPS
Token Burning EIP-1559 has introduced token burning to Ethereum. SOL burns 50% of each transaction fee.

Ethereum vs Solana: Which Is A Better Buy?

Ethereum is the industry leader when it comes to DeFi and NFTs. However, Ethereum has some key issues that need to be addressed. Solana has the backing of some of the biggest names in the industry, with its high-performance blockchain and industry-leading transaction speeds grabbing eyeballs. It is imperative to be thorough in your research before buying either of the two tokens.