Blockchain technology went mainstream with the development of Bitcoin in 2009. Ethereum, an open-source blockchain network that pioneered decentralized applications (dApps), picked up speed just six years later in 2015. Now, thousands of such protocols fill the blockchain market. Solana, which was launched in 2017, has quickly risen to the top to become one of the most used decentralized finance (DeFi) platforms in the space.
Before the launch of Solana, existing blockchain networks like Ethereum were heavily scrutinized for what was described as the “blockchain trilemma.”
The blockchain trilemma describes a situation whereby a blockchain network must give up one of three primary attributes — decentralization, security, or scalability — to perform optimally and efficiently. Unscalable open-source blockchain networks operate with a slow throughput. They also have higher gas fees, smaller block sizes and slower response times.
Developers of blockchains like Ethereum and Solana have been working to address this trilemma in their own respective methods. While Solana and Ethereum differ in key ways, each has its unique advantages and disadvantages. So, what is Solana? How does it work, and how does it compare to Ethereum?
What is Solana?
Solana is an open-source blockchain network designed to address the scalability issue Ethereum and other similarly structured networks face. It aims to tackle scalability through its unique consensus mechanism, which greatly increases its maximum transactions per second (TPS), enabling the blockchain to handle greater loads of traffic.
Like Ethereum, Solana hosts a rich ecosystem of decentralized finance (DeFi) protocols. With its fast transaction times and diverse array of products, Solana has grown to become one of the most popular blockchains in the world.
What is Ethereum?
Ethereum is an open-source blockchain network with smart contract functionality. A smart contract is a programmable code stored on a blockchain that is used when a transaction calls upon it. It will then run when predetermined conditions are met.
Smart contracts allow peer-to-peer transactions between users without the need for a centralized third-party mediator, each dApp is operated by a set of smart contracts on a decentralized network that provides services, such as lending and trading, to users without the need of middlemen.
That said, what are the significant differences between Solana and Ethereum?
Solana vs. Ethereum
For this comparison between Solana and Ethereum, we’ll look at both platforms’ consensus mechanisms, architectural design/technology infrastructure, speed, scalability, and utility.
Common Consensus Mechanisms
One of the major highlights of any blockchain infrastructure is its consensus mechanism, which is the validation process by which data is verified before it’s registered on the network’s storage facility.
In other words, a consensus mechanism is a fault-tolerant mechanism used to validate the authenticity of blockchain transactions without affecting their security apparatuses. It also refers to the methods used to achieve agreement, trust, and security across a decentralized computer network.
There are many types of consensus mechanisms, and newer upgrades are developed regularly. However, most blockchain networks utilize only one of the two: Proof of Work (PoW) and Proof of Stake (PoS).
Proof of Work requires miners to compete against each other to add the next transaction block in a sequence, thereby earning a reward. Miners must solve a mathematical cryptography query, and the first to arrive at the solution gets the reward.
Unfortunately, this approach is expensive and is not energy-efficient. This setback prompted an alternative to the consensus process, leading to the launch of Proof of Stake.
Proof-of-Stake validating nodes commit a portion of their native coins, or “stake,” to participate in the network’s algorithm lottery. The network keeps each other in check by having everyone monitor the other validating nodes’ activity and punishing any malicious actors that inaccurately verifies transactions.
Because no highly-demanding mathematical computational effort is required, Proof of Stake is a more energy-efficient consensus mechanism than Proof of Work .
Ethereum originally ran on a similar proof-of-work model to Bitcoin’s. However, to address Proof of Work’s scalability issue, developers launched the Ethereum Merge (also known as Ethereum 2.0). The latest update adopted the proof-of-stake consensus mechanism, which could resolve the network’s scaling issues and, with time, potentially achieve a much faster throughput than its proof-of-work predecessor.
On the other hand, Solana combines two types of consensus mechanisms — Proof of
Stake and Proof of History (PoH) in order to optimize scalability while maintaining security. Thanks to its consensus model, Solana’s throughput can theoretically reach about 710,000 transactions per second (TPS).
Solana saves time validating transactions by using the PoH model to validate time based on block height, rather than by trusting other nodes. The newer PoH consensus verifies the passage of time between two events to record a chronological sequence of transactions independent of local clocks or timestamps. Time synchronization is integral to the method by which network connections and monetary transaction protocols operate.
Before the launch of The Merge, Ethereum operated at an average speed of 15 TPS. While the freshly-merged blockchain still maintains a similar TPS, with its new architecture, this TPS could increase with time.
This low throughput was due to Ethereum’s structure in the network validation process, which led to a backlog of requests. Every node in Ethereum needs to sync up when a new block is produced. If the block time – the rate at which batched transactions are validated and new blocks are produced – is too fast, it would cause constant forks in the blockchain. This resulted in delayed transaction confirmation times and high gas prices — some as high as $200 USD per transaction. However, Ethereum 2.0 could achieve network speeds of up to 100,000 TPS. The current TPS is far from its potential, we recommend going to etherscan.io to see the current TPS under transactions.
On the other hand, Solana’s throughput is limited by the speed of a network connection. According to developers, on a standard gigabit network the throughput should be able to reach a potential maximum of 710,000 TPS, while a 40 gigabit network should increase that number to a maximum of 28.4 million TPS — a major improvement. However current TPS is far from it’s maximum potential and we recommend going to solana.fm to see current TPS speeds.
In addition, Solana’s block time clocks in at just 800 milliseconds, whereas Ethereum’s sits at 12-14 seconds with its proof-of-stake implementation. Having a faster block time opens up new possibilities for higher-demanding decentralized applications (dApps) like orderbook-based exchanges and blockchain gaming.
Solana has succeeded largely due to its scalability, as users on the network have consistently enjoyed some of the fastest settlements in the blockchain space. While Ethereum’s scalability has been notoriously limited by its proof-of-work architecture, the recently-implemented update to a proof-of-stake consensus mechanism should resolve that problem with time.
With the high level of adoption that Ethereum has seen since it secured its place as the first mover in smart contract technology, bringing scalability to its network could cement its place as the dominant smart contract platform.
Both Ethereum and Solana are two of the most heavily utilized blockchains in the space. While Ethereum leads the market in NFT development, Solana’s NFT marketplace is close behind.
Both platforms offer a robust offering of various decentralized finance (DeFi) protocols, such as lending and borrowing markets, blockchain games, and more.
Additionally, Solana has been making efforts to plant its foot in the real world, releasing products such as the Solana Saga phone, opening an offline retail shop called Solana Spaces and supporting the Helium blockchain to introduce the first-ever blockchain-based mobile phone carrier service, Helium Mobile, as part of Helium’s partnership with T-Mobile.
Is Solana Part of Ethereum?
While they share certain attributes, Solana and Ethereum are separate blockchain network platforms. Solana and Ethereum are two distinct platforms that serve a similar purpose. A developer’s preference is based on their specific needs of the project at hand.
Is Solana Better than Ethereum?
The notable distinction between the two is that Ethereum 2.0 adopted the proof-of-stake consensus algorithm, while Solana adopted both the proof-of-stake and proof-of-history algorithms.
Ethereum is going in the direction of becoming a base consensus/security layer for other blockchains, such as layer-2 scaling solutions like Arbitrum or Optimism, whereas Solana is focusing on increasing scalability on its own chain to cater for its own transactions.
Overall throughput, gas fees, and validator barrier of entry also vary. Neither is better, which network you use comes down to personal preference.
Solana is becoming one of Ethereum’s chief competitors as both a blockchain network and a crypto asset as it grows its ecosystem of products and developer community. The question as to whether it can surpass Ethereum will only be answered with time as the market decides where to place more value between the two.
Clarifying Crypto with FTT DAO
As blockchain technology progresses, crypto will become increasingly more complex, expanding the scope of how we understand cryptocurrencies like Solana and Ethereum.
To learn more about the world of cryptocurrency, blockchain, and Web3, the FTT DAO blog is full of resources to kickstart your journey in the space.
Be sure to follow FTT DAO on Twitter and subscribe to the FTT DAO Youtube channel to stay informed on the latest developments in crypto.