The platform for creating decentralized online services based on the Ethereum blockchain was the first project to fully implement smart contract support. This led to its growing popularity and spurred the development of such sectors of the crypto economy as decentralized finance (DeFi) and non-fungible tokens (NFT). A year ago, Ethereum was the absolute leader with a 97% share of total value locked in DeFi, while now its share has dropped to 62%.
Load Problem and the Emergence of Fast Blockchains
Along with the growth in demand came a significant load on the network, for which Ethereum was unprepared. To ensure security and maximum decentralization, the blockchain was built on the proof-of-work protocol, the downside of which was low throughput. Ethereum cannot process more than 20 transactions per second (TPS), forcing users to pay higher fees to have their transactions included in a block. If you look at the state of affairs today, competition among users has led to record fees, often exceeding $50.
Ethereum's low speed and high costs spurred the development of faster blockchains. One promising one is Solana, which at speeds above 50,000 TPS charges a fee of less than a cent. Solana is based on the proof-of-stake protocol and has a lower degree of resilience and decentralization than Ethereum. However, this did not stop Bank of America from calling it a "potential VISA of the digital ecosystem."
For example, last fiscal year VISA processed 165 billion transactions, while over the same period Solana processed over 50 billion. Solana entered the NFT market only in August, but now there are over 6 million digital assets based on it.
Prospects of Solana
Solana is a young project that continues to struggle with growing pains. Last year, the network went down several times due to DDoS attacks on one of the decentralized exchanges, and Solana Labs management did not immediately acknowledge the problem. Much of Solana's ability to continue eating into Ethereum's market share depends on the developers' ability to solve problems quickly.
Nevertheless, the number of projects using the Solana blockchain continues to grow. At the same time, it is not so often used in practice, so many considerations about it are subjective.
How effectively Solana can solve the scalability problem will only be understood after the network operates in the main mode and passes the test of time.
Given the successful history of attracting investors, Solana's prospects are interesting. In particular, in mid-September it was announced that digital asset issuer Valor launched ETH on the Nordic Growth Market trading platform on Solana. In addition, just recently Deutsche Boerse announced the launch of exchange traded notes (ETN) on Solana. It is not too late to buy the coin, but it is worth carefully weighing the risks, as the crypto market is characterized by high volatility.
PR