Is Solana Outgrowing Ethereum with Gas Fees and Transaction Speed?

Due to the recent industry maturity in the crypto space, the market capitalization for top cryptocurrencies keeps changing. An instance is the case of Solana (SOL), which has recorded more than 2,500 transactions every second. As a result of this, its value is making a moon ride. In over a year, Solana’s price had grown by about 13,000% as it trades $240 compared to when it started trading a little low of $2.

Solana is a blockchain platform with the proposition of conducting lightspeed transactions at a low cost while maintaining decentralization. Some features are aiding Solana to do this efficiently. An example of such features is the “proof of history” mechanism.

As a result of this feature, Solana can process about 50,000 transactions in a second. And that’s is way beyond the Bitcoin network that can only process seven or Ethereum network that can only process 15 transactions in a second.

Decentralized finance (DeFi) applications are making Solana its new abode because the Solana network incorporates smart contracts. Solana’s ecosystem has digital assets of about $15,000,000,000 locked, resulting from this development and high utilization,

So far this year, about 90% of crypto assets have derived benefits from the year-round bull run. But the soar in Solana’s price resulted from the Web 3.0 experience it leverages. Transactions are instant, and you pay almost a fraction of the whole money as transaction fees. Its user-friendly interface and applications are making it easy for Solana’s adoption.

A critical examination into the increased Solana’s adoption revealed that retail investors seek alternatives to the Ethereum network. That’s because the high demand for DeFi and non-fungible tokens (NFTs) led to the spike in Ethereum (ETH) gas fees. As a result, Ethereum is expensive to use while transacting. But Solana’s transactions are fast and cheap. Thus, retail investors took it as an efficient alternative.

One more advantage Solana enjoys is its model of allowing innovation to flourish on its platform with a good user experience. This results in a booming ecosystem.

Solana vs. Ethereum: A Threat?

There are predictions that SOL may take the wheel as the second-largest cryptocurrency based on market capitalization if Ethereum is not advancing in the service provision. Solana is beating Ethereum as it leverages its offer of low transaction costs and instant processing. This is its advantage to onboard more users. But is gas fees all that is to Ethereum?

While that opinion may hold, others believe that crypto users have embedded Ethereum as part of them since its inception and innovative adaptability. So, it will be difficult for Solana to beat Ethereum in this game because its users are well invested in it. Likewise, some persons would rather have Ethereum as their primary network or nothing. Those people are regarded as idealists.

Another advantage that Solana may have over Ethereum to overtake it is if ETH backs down on its promises accompanying Ethereum 2.0. If that happens, users may start looking more into using Solana than Ethereum. However, this may likely not happen anytime soon.

Meanwhile, Solana will trade the same volume as Ethereum if it keeps its momentum and builds its developer and user community.

When you consider different factors attached to using the Ethereum network, you would agree that its price hike is worthy. But this price appreciation is a reason portfolio diversification should receive significant consideration. At the same time, there is a belief that the potential technicality of Solana can make it a good number 3 global cryptocurrency.

Although Ethereum may not compete with Solana on transaction speeds, it will keep being ahead of Solana because it has low entry barriers. Meanwhile, ETH will keep being significant when it comes to market cap. This is due to being a first-mover and its extensive network effects.

While users need to have ETH around, they believe that Ethereum will become more cost-effective and transaction speed will increase if ETH incorporates the proof-of-stake consensus mechanism. There is high optimism that it will fix the gas fee, and we may see it lowered with time.

Solana and Its 17-hour Downtime

About 17-hour downtime happened on the Solana network on September 14, 2021. This downtime happened because users were denied service access. And it resulted from an increase in the number of transactions users was trying to process in a second. The network experienced an overwhelming transaction number of 400,000 in a second. Solana’s Twitter page revealed that.

Solana’s engineer conducted some stabilization processes, but it was futile. After a series of efforts, validators performed a coordinated restart. As a result of this, the network rolled back at full speed. Likewise, Ethereum’s Arbitrum One reportedly has its sequencer going offline for about 45 minutes. However, this didn’t affect the entire Ethereum network.

Ethereum’s gas fees are outrageously high because of its total decentralization and the impossibility of the network to shut down any moment from now. It won’t happen in three or five years as much as crypto stays within the digital community. Its resilience is its advantage developers and users are leveraging to build more on the Ethereum network.

As with Ethereum, Solana’s investors were not deterred about the event. The price of Solana returned to what it was before the network shutdown. Investors believed that the incident was part of possible experiences, and it didn’t stop or cut out Solana’s value proposition.

For whatever it is, Solana’s price behavior reveals the difficulties attached to building a universal distributed system for the crypto community and the constant demand for the network scalability and tendency to allow innovation. Meanwhile, some experts still seek clarifications before they can get involved.

Is It a Network Problem?

A more significant percentage of experts believe that the 17-hour outage on Solana is a little thing to worry about on the emerging blockchain network. On the other hand, some think it is significant to receive appropriate investigation and mitigation to prevent possible future outages.

As a result, some experts opined that Solana should have a separate process that handles cross-chain transactions because 17-hor downtime is a significant call for Solana. Thus, the network must separate its architecture to process on-chain and cross-chain transactions.

Is the Crypto Community Giving Up on Solana Adoption?

Over time, there is an increasing interest in the adoption of Solana by the crypto community. This resulted from its DeFi ecosystem that keeps growing and the steady support for the launch of NFT marketplaces. Likewise, its cheap transaction fees and lightspeed transactions make it an efficient alternative for retail investors. However, institutional investors are listing it as a point of interest ad they consider crypto adoption.

As much as Solana’s features attract users across different sectors, it is not making its stance outstanding yet. Retail investors are looking into new opportunities due to Solana’s booming DeFi space.

But questions remain regarding its viability to be the go-to platform due to its features. Or if Ethereum 2.0 and its featured perks will outrun Solana as Ethereum has been leading the fore before.

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