A blockchain is a network of peer-to-peer computers that all have the same records stored, resulting in a system that is difficult to attack or manipulate.
Of the public blockchains, Ethereum and Solana are arguably two of the most prolific.
In this guide, let's take a look at the origin stories of both Ethereum and Solana, and highlight the individual strengths and weaknesses of each.
The Scalability Trilemma
To grasp how blockchains differ from one another, you'll first need to understand the Scalability Trilemma.
The term was coined by Vitalik Buterin, co-founder of Ethereum, and lays out three characteristics the ideal blockchain would need to have: decentralisation, scalability, and security.
Vitalik also poses that it is near impossible for a blockchain to achieve all three characteristics well, so trade-offs occur.
As a result, all major blockchains today compromise on one of the characteristics in or order to successfully achieve the other two.
Ethereum vs. Solana
Below let's dive into how Ethereum and Solana differ from one another, and how their strengths and weaknesses stack up.
Ethereum
With respect to the the scalability trilemma, Ethereum prioritises security and decentralisation over scalability
Ethereum, the blockchain powering the Ether cryptocurrency ($ETH), was co-founded by Vitalik Buterin and initially released in 2015.
The origin story of Ethereum is an integral part of Web3 lore. Vitalik set out to create Ethereum due to an incident involving World of Warcraft. From 2007 to 2010 he played the game, quickly rising through the ranks. Blizzard, the gaming studio behind the game, apparently removed the damage component of his warlock’s Siphon Life spell. This significantly weakened the character and made Vitalik realise “what horrors centralised services can bring”.
When he was introduced to blockchain technology and Bitcoin in 2011, he began to imagine a world without centralised services. However, he found the Bitcoin blockchain to be too restrictive, as it only allowed for a limited number of financial use cases.
In 2014, he released a white paper describing what would ultimately become Ethereum. Later that year, Vitalik and other co-founders launched a successful crowdsourcing campaign and Ethereum launched. Since its initial release in 2015, the Ethereum blockchain has grown rapidly and onboarded a significant number of developers.
Ethereum's key differentiator from the Bitcoin blockchain is its ability to trade more than just cryptocurrency – this is because it allows for smart contracts and dApps (decentralised applications) to be built on top of it. The native token of the Ethereum blockchain, Ether or $ETH, is commonly used to interact with and carry out transactions of these smart contracts and dApps. Ether can be used to buy and trade cryptocurrencies and other digital assets such as NFTs (non-fungible tokens). With the rise of DeFi (decentralised finance) and NFTs, Ether has skyrocketed.
Initially, Ether was created by means of “mining” and the corresponding “proof of work” consensus mechanism – similar to Bitcoin. However, since this is energy intensive, Ethereum switched to the “proof of stake” consensus mechanism in 2022.
Ethereum: Strengths
Decentralisation
Validators are responsible for adding new blocks to a blockchain, processing transactions and storing data, and are a backbone of blockchain technology. Since the technological requirement to become an Ethereum validator is relatively low, more people can run Ethereum validators profitably. This makes Ethereum less dependent on any one validator, which in turn results in a more decentralised network.
Security
The hashrate measures how many calculations per second the Ethereum blockchain can perform. Due to Ethereum’s high hashrate, it would take extremely expensive hardware and computational power to hack the blockchain. Ill-intentioned or dishonest validators are subject to punishment, which further disincentives them from acting maliciously.
Ecosystem
Currently, Ethereum is home to the most sophisticated DeFi ecosystem. The ecosystem is made up by renown brands such as Maker, Uniswap and AAVE and continues to grow. When looking at the total revenue the Ethereum blockchain generates, it’s apparent that the network is still the market leader when it comes to blockchain profitability.
Ethereum: Weaknesses
Speed
The highest number of transactions performed per second (TPS) for the Ethereum blockchain was measured at 108 – slower than other major blockchains. Ethereum 2.0 looks to address this and envisages TPS up to 100,000.
Scalability
Ethereum prioritises security and decentralisation over scalability. As a result, the transaction costs (gas fees) on the blockchain can be expensive in periods of high network usage – pricing out a significant number of users.
Reliance
Although decentralisation is one of Ethereum’s strengths, the blockchain has been criticised for its reliance on centralised cloud services such as Infura and AWS. Critics argue that Ethereum is not fully decentralised, because if services like Infura and AWS were to shut down, so would the majority of dApps on the blockchain itself. This was the case in April 2022, when a number of Ethereum dApps went offline as Infura experienced a service outage.
Solana
With respect to the scalability trilemma, Solana prioritises security and scalability over decentralisation.
Because of its popularity, the speed of the Ethereum blockchain has become sluggish and transactions expensive at times of high usage. Ethereum is tough to scale, making the onboarding of millions of new users difficult. Even with the upgrade to Ethereum 2.0 these challenges might not be sufficiently alleviated.
There are numerous alternatives to Ethereum, one of which is Solana.
“Solana” refers to a beach in San Diego, California, where Anatoly Yakovenko, the co-founder of the blockchain, worked nearby. Before starting the Solana project in 2017, Anatoly worked at Qualcomm and Dropbox as an engineer.
The Solana blockchain was developed to address the issues both the Bitcoin and Ethereum blockchains face. The blockchain scales really well and allows for a high number of transactions per second – all while staying cost-effective. Solana, often referred to as SOL, is the native cryptocurrency of the Solana blockchain.
Similar to Ether, SOL can be used to interact with and carry out transactions of smart contracts and dApps. SOL can also be used to buy and trade cryptocurrencies and other digital assets such as NFTs. The popularity of DeFi and NFTs has raised the profile of the Solana blockchain.
The blockchain applied the “proof of stake” consensus mechanism from the outset, which has a significantly lighter environmental impact than the “proof of work” consensus mechanism currently utilised by the Bitcoin blockchain (and Ethereum in the past).
In June 2022, Solana announced plans to enter the mobile space by introducing a flagship Android smartphone – Saga – and an open source software development kit (SDK), dubbed Solana Mobile Stack (SMS).
The aim of this initiative:
- Make interactions with the Solana blockchain mobile-friendly and seamless.
- Bypass the restrictions of the iOS App Store and Android Google Play Store.
- Put pressure on incumbents such as Apple and Samsung to integrate Web3 native hardware and software components.
Solana’s energy efficiency, easier scalability, cost-effective transactions and mobile-first focus have all contributed to the heightened profile of the blockchain.
Solana: Strengths
Speed
Theoretically, the Solana blockchain can reach 50,000 TPS with the actual TPS hovering between 2,000 to 3,000 TPS most of the time. Solana’s TPS is much higher than Ethereum’s, providing not only faster transactions and a better user experience, but also the ability to develop and introduce new blockchain innovations.
Fees
Solana prioritises security and scalability over decentralisation. As a result, transaction costs on the Solana blockchain mostly cost less than a cent for a single transaction, even during periods of high network usage. This is not only more beneficial for current users, but also a wider range of other users who are looking for a better blockchain experience.
Developers
In the last couple of years, Solana has seen an influx of ecosystem grants and VC activity. This has helped to attract developers to build on Solana and further push the ecosystem forward. In 2022 alone, the number of monthly active developers within the Solana ecosystem grew by 83%.
Solana: Weaknesses
Decentralisation
The barrier to entry is still high for people that want to run Solana validators. The recommended hardware requirement to run a Solana validator is a 12 core CPU, 128GB of RAM and over 1TB of disk space. For an Ethereum validator, the minimum hardware requirement encompasses a 2 core CPU, 4GB of RAM and any SSD. For most, it makes sense to source/build a custom rig to run a Solana validator, while an Ethereum validator can run on everyday laptops. Since the technologic requirement is high, becoming a Solana validator is not easy. This makes Solana more dependent on existing validators, which in turn results in a more centralised network.
Outages
Due to its rapid growth, the Solana blockchain still suffers from degraded performance and outage issues from time to time. Network outages are critical, as they lead to slow transactions and dApps not working properly – leading to frustrated users and a subpar user experience. These seem to be growing pains, which Ethereum also has (see “Reliance” section above).
Ecosystem
The number of major protocols on Ethereum significantly outweigh the protocols on Solana. Additionally, the revenue the Solana blockchain generates through transactions is nothing close to that of Ethereum. However, with the recent introduction of fee market innovations, the Solana blockchain will be able to ramp up its revenue significantly.
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Hoped the guide helped you in understanding the differences between Ethereum and Solana, while also appreciating that both blockchains have their individual strengths and weaknesses.
Disclaimer: This guide is strictly for educational purposes only and doesn’t constitute financial or legal advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
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