Ethereum blockchain made its debut at the rave of early crypto adoption, a time when Bitcoin and Litecoin were already big players in the space. With its superior Technical capacity, and diverse use cases, it introduced new concepts not just in crypto but also in the Technology and finance sectors. Unlike Bitcoin, which primarily serves as digital currency, Ethereum provides a robust platform with the concept of Smart contracts – self-executing agreements written in codes, and Dapps. Ethereum supported the growth of defi application and enabled the creation and exchange of Non-fungible tokens(NFTs). With these and even more, the blockchain became indispensable and could attract large users. To date, Ethereum still has its Technology to boast of. However, it has limitations that have given room for newer projects to tap into the blockchain’s audience.
Ethereum employs the proof of work (PoW) consensus mechanism to validate transactions on the network. PoW uses mathematical puzzles to select miners to validate a block. Think of it as miners competing to crack a code to secure a permissionless network. The first miner to solve the puzzle gets to add a new block to the blockchain, and as a reward, receive newly minted cryptocurrency. This mechanism scores high in terms of security. However, solving these mathematical puzzles requires lots of compute resources, leading to lags in between transaction validations, significantly high gas fees, and an overall bulky network.
To achieve a more flexible network, contemporary blockchain projects are modifying existing technologies and introducing novel scaling solutions. This creates a whole new market for smart contract blockchains. As a reflection of their primary goal, these layer-1 blockchain projects are tagged “Ethereum Killers”.
A major shift is their preference for the Proof of Stake (PoS) consensus mechanism and even new consensus algorithms. Unlike the PoW, PoS is a financial approach to network consensus. It requires block validators to simply lock up assets on their nodes and operate with less resource-intensive facilities. New-generation blockchains that adopt this mechanism offer high throughput and lower fees, saving users up to 97% of the fees paid on Ethereum. PoS EVM chains like Binance Smart Chain (BSC), Polygon, and Fantom have grown in relevance. But while they score high in performance, their security is questionable with most networks running on a few validators. Even Ethereum has moved to PoS in an attempt to improve the UX.
Elsewhere, Layer-2 scaling solutions are fusing the security facility on Ethereum with separate execution environments to develop high-performance networks with the same level of security as the main network…theoretically. Optimism, Arbitrum, Base chain, and ZKsync are prominent figures in this space.
‘Ethereum killers’ continue to grow in headcount but they have not been able to get the work done in terms of providing sustainable, novel alternative solutions to the limitations of Ethereum. They all struggle to sustain network activity for a significant period of time, after launch buzz. Instead, Ethereum-based layer 2 solutions are contributing positively to driving the adoption of the Ethereum blockchain.
Amidst these, Solana despite its lapses appears to be rising to the challenge. Solana network offers significantly faster and cheaper transactions and an improved user experience thanks to its parallelized Virtual Machine and Proof of History (POH) consensus mechanism. With a transaction speed of 2,600 transactions per second, it is almost 200 times faster than Ethereum, on paper. Following the invention of Firedancer—a new validator client on Solana, its numbers might rise to 1 million transactions per second in the future. But that is not all…
Placing Solana side by side with Ethereum and a few top “Ethereum killers” against some measures of success like total value locked (TVL), daily active address, daily transaction, revenue, and Market capitalization, would clarify the rate of momentum Solana has been able to pull so far, especially in terms of adoption.
As of July 22, 2024, the total value locked on Solana is $5.383b, with a balanced distribution of the assets among defi platforms including exchanges, aggregators, RWA, and more. just like in Ethereum with $60b. However, this is not the case for other Ethereum killers. Although Tron with $8.474b TVL was placed above Solana, a bulk of the assets are locked in a single defi platform, same as Avalanche and TON with $984.08m and $763m respectively.
Statistics show that Solana and Tron have 1.9 M active addresses, however, Solana’s curve follows an increasing trend while Tron is headed for a downtrend. Ethereum is the next among the blockchains of discuss but it has only 348, 500 active addresses.
In terms of daily transactions, Solana leapfrogs close contenders like Ethereum (1.2M transactions) and Tron (760.6K transactions) with 43.7M million daily transactions. Transaction fees on Solana are significantly lower than those on Ethereum, yet it was able to pull a $1M revenue, exactly half of that on the Ethereum blockchain.
If we overlook the regular network congestions and shutdowns, Solana is recording exponential growth in user count, and growing a reputation for being a pacesetter in the L-1 smart contract.
Final Thoughts
It is normal for solutions in the crypto space to experience highs and lows with all parameters. But Solana from the time of inception has shown constant growth and doesn’t seem to be relenting. Although Ethereum users have stayed true to the blockchain, Solana might be the long-awaited catalyst that effectively disrupts Ethereum’s user base. Time will tell.
This article has been published on my Medium page.
