It has been reported that the Solana network launched in 2020, and its native token, SOL, has since grown into the fifth-largest cryptocurrency with a market capitalization of $47 billion. An order of magnitude faster than Ethereum, it has been used to settle over 50 billion transactions and mint over 5.7 million nonfungible tokens (NFT).
However, critics argue its speed comes at the cost of decentralization and reliability, but Shah thinks the benefits outweigh the drawbacks.
“Its ability to provide high throughput, low cost and ease of use creates a blockchain optimized for consumer use cases like micropayments, DeFi, NFTs, decentralized networks (Web3) and gaming.”
The report said that Shah went on to suggest that Solana is taking a slice of Ethereum’s market share thanks to its low fees, ease of use, and scalability, while Ethereum may be relegated to “high-value transaction and identity, storage and supply chain use cases.”
“Ethereum prioritizes decentralization and security, but at the expense of scalability, which has led to periods of network congestion and transaction fees that are occasionally larger than the value of the transaction being sent.”
Likewise, Visa processes an average of 1,700 transactions per second (TPS), but the network can theoretically handle at least 24,000 TPS. Ethereum currently handles around 12 TPS on its mainnet (more on layer twos), while Solana boasts a theoretical limit of 65,000 TPS.
“Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has tradeoffs, illustrated by several network performance issues since inception.”
He has experienced more than its fair share of network performance issues over the past months, such as withdrawal issues most recently confirmed by Binance, reports of delayed performance across social media last Friday, and what appeared to be a distributed denial-of-service attack on January 5, although Solana denied this was the case.
Moreover, this came less than a month after a previous attack on December 10, with reports of network congestion caused by mass botting associated with an initial DEX offering on Solana-based decentralized exchange platform Raydium.
Austin Federa, the Head of Communications at Solana Labs, said that developers are currently working to address the network’s issues, specifically in relation to improving transaction metering.
Thus, he added:
“Solana’s runtime is a new design. It doesn’t use EVM [Ethereum Virtual Machine], and a ton of innovation was done to ensure that users have the cheapest fees possible, but there’s still work to be done on the runtime.”