Ethereum is the king of smart contract platforms and has dominated the dApp landscape for many years. However, Solana also emerged as an interesting competitor, often dubbed the “Ethereum killer”.
Since the bull run in 2023, SOL has been surpassing ETH by a considerable margin, returning more than 450% over the last year. In fact, when it comes to solana price prediction 2025, many forecasts suggest that the token could go as high as $500 ( or even surpass that target) by 2025.
But despite all the positive signs, it’s clear that Solana still has a long way to go when it comes to market capitalization, as Ethereum boasts a market cap of $360 billion compared to Solana, which accounts for $60 billion.
The two projects have been in a battle for years, as those in the crypto community have been debating which one deserves to be crowned the king of smart contracts, but it’s worth noting that there are obvious differences between Solana and Ethereum.
In this blog, we will guide you through everything you need to know about these two blockchain giants and how they are unique, so read on!
Solana vs Ethereum: Key differences
Transaction speed and fees
Solana has a significant advantage over Ethereum regarding transaction speed, processing thousands of transactions per second, which makes it a lot faster than Ethereum, which has only the capacity for around 15 transactions per second.
While Ethereum’s switch to a PoS consensus mechanism was designed to solve this scalability issue, the network remains too expensive to utilize for small transactions, as the fees range from $10 to $50 and above.
The two projects differ in terms of the consensus mechanisms they use: while Ethereum relies on the PoS model, enabling validators to stake ETH so they can be able to validate transactions and earn ETH as rewards, Solana uses a combination of PoS and PoH, with the latter adding a time-stamping element to block creation, helping boost efficiency and resulting in faster speeds when it comes to network transactions.
Regarding transaction fees, it’s no secret that Ethereum has historically suffered from high gas fees, especially during network congestion. The fees can considerably raise the cost of interacting with the network, especially for smaller transactions.
Solana’s transaction fees are developed to remain low (even when there are high network loads), making it appealing for frequent interactions as well as micro-transactions.
Ecosystem maturity
Ethereum has a well-established ecosystem of DeFi protocols, dApps, NFT marketplaces, and a large developer community. On the other hand, Solana is growing its own ecosystem quickly through its SuperTeam community; however, unlike Ethereum, it has a smaller developer pool and fewer projects.
Ethereum’s dominance is seen in the TVL (Total Value Locked) across its different dApps, while Solana’s TVL currently sits at around $3.5 billion. Ethereum has around 9,000 monthly active developers participating in its open-source ecosystem, while Solana has more than 350 dApps and 1.28 million unique active wallets, and it is particularly popular in areas benefiting from its low transaction costs and high throughput.
Use cases
Both Solana and Ethereum offer compelling use cases, especially in the realms of DeFi, Web3 gaming, and NFTs. Ethereum stands out in the DeFi landscape as many protocols boast billions in TVL, with the platforms enabling users to borrow, lend, and swap crypto assets without relying on a middleman.
However, DeFi on Solana is also exploding, with many projects offering appealing alternatives to Ethereum. Despite the smaller TVL, low cost and fast speed features attract users who want to participate actively in DeFi strategies.
The two projects also have applications in the NFT landscape. Ethereum has been a dominant force in the NFT industry, hosting numerous platforms and collections and gaining massive credibility and adoption due to its early entry into the market.
But Solana has also achieved popularity, with different platforms attracting users priced out of Ethereum and creators and collectors who want to make the most out of its affordability.
Without a doubt, both networks provide diversified use cases, with dApps offering complex DeFi solutions existing on both (although it’s worth noting that Ethereum handles more volume).
Interestingly, Solana has performed notably in the past year, exceeding Ethereum’s trading volume. Furthermore, the Web3 gaming market has also started to embrace Solana because of the obstacles faced due to the high transaction fees of Ethereum.
Solana and Ethereum’s roadmaps
Solana’s ambitions for the future are big, focusing on enhancing network scalability and stability and expanding its ecosystem. The Solana Foundation is looking to innovate by focusing on upgrades such as token extensions, enabling more customizable and programmable tokens, which is especially beneficial for developers and enterprises interested in stablecoins and other real-world assets.
Solana’s PoH and PoS will remain integral to its scalability – while the network is already handling thousands of TPS, the continuous updates seek to increase this volume. Furthermore, the development of Solana will also see improved partnerships with projects in the gaming, NFT, and DeFi sectors, capitalizing on its substantial throughput and low transaction fees.
Solana is also focusing on mainstream integrations, like the Solana Saga smartphone which aims to bridge mobile tech with the use cases of blockchain technology. These developments aim to attract more developers and users while boosting users’ overall experience.
Of course, Ethereum’s roadmap is also exciting and is heavily focused on finding an optimal solution to the blockchain trilemma: balancing security, scalability, and decentralization.
While Ethereum has made massive strides with the Shanghai and Merge upgrades, the transition to PoS hasn’t fully addressed the challenges that Ethereum faces regarding scalability. Upgrades such as Pectra, merging two planned updates ( Prague and Electra) into a detailed package, aim to provide solutions to this end.
Ethereum is also seeking to implement Verkle Trees, which will enable stateless clients and boost scalability by decreasing the storage burden on nodes. The focus of Ethereum on account abstraction will make interactions with smart contracts a lot more seamless, allowing users to engage with dApps, even if they may not be technically inclined.
The bottom line
Moving beyond the narrative of Ethereum killer, it’s clear that both Solana and Ethereum are successful projects in the crypto landscape, with billions of dollars in TVL and use cases that appeal to millions of people.
Since the two projects have thrived so far, there’s a good chance they will continue to do so, and ultimately, choosing between the two is only a matter of personal preference.
Article and permission to publish here provided by Mary Hall. Originally written for Supply Chain Game Changer and published on December 24, 2024.
Cover image provided by vecteezy.com.