5 Reasons Solana Can Dethrone Ethereum As Leading NFT Platform

Solana has emerged as one of the cryptocurrency stars of 2021, climbing 3,700% at its peak before struggling amid market corrections.

Central to Solana’s widely documented rise to power was the promise of unprecedented utility, posing a direct threat to the dominance of the Ethereum blockchain network, which has long been the benchmark for developers to launch projects and decentralized finance (DeFi ) applications.

But could Solana surpass Ethereum to become the number one blockchain DApp? Potentially yes, and here are five reasons why.

Solana price versus Ethereum

Severe 2022 corrections sent the Solana and Ethereum networks plummeting, with SOL retreating about 95% compared to ETH’s 75% retreat from their respective all-time highs.

As data from CoinGecko shows, SOL’s deepest drop is due, in large part, to its price increase in 2021. Backed by many influential supporters, SOL dropped from $1.54 in value on Dec. 31, 2020 to a high of $259.96 on Nov. 4, 2021, a remarkable rally by any measure.

At the heart of SOL’s great investor interest is Solana’s highly functional blockchain, which has made the network a great space for buying and selling NFTs and hosting other high-quality Dapps.

It’s this level of utility that has led some commentators to label Solana an “Ethereum killer,” but is that really the case? Let’s look at five reasons why Solana could dethrone Ethereum as king of NFTs.

5 Reasons Solana Might Outperform Ethereum

Launched in early 2020 by two former Qualcomm engineers, Solana hosts a fast and affordable blockchain that is the perfect home for many DeFi platforms and Dapps, including NFT marketplaces.

Significantly, Solana has a “Proof of History” consensus that establishes the order of transactions. Rather than relying on validators to confirm the time of transactions, proof of history can provide more security and flexibility for developers and validators to complete transactions faster.

Additionally, Solana uses Cloudbreak as a form of distributed storage that can prevent your transaction history from taking up massive amounts of processing space and slowing down your network.

Built with functionality in mind, Solana is not designed to be a store of wealth like Bitcoin and was developed to help the cryptocurrency ecosystem grow faster than Ethereum allows. But will it be enough to topple Ethereum’s dominance in the DeFi space?

1. Revolutionary Consensus on the Proof of History

As discussed above, Solana’s Proof of History consensus is at the forefront of the cryptocurrency landscape, and this approach has earned the network many admirers across the ecosystem.

This is because many programmable blockchains like Ethereum rely on external programs to add a “median” timestamp to transactions to validate them in the order they were received.

Solana says this incorporates unnecessary levels of centralization into a system that should be entirely decentralized (although there are still valid questions raised about SOL’s decentralized structure). It is thanks to the revolutionary Proof-of-History consensus that Solana can put these timestamps on the blockchain itself via a variable delay function (VDF).

“Every block maker has to go through the VDF, this proof of history, to get to the allotted slot and produce a block,” says Anatoly Yakovenko, co-founder of Solana Labs, adding that this approach “gives the ledger this interesting property which allows you to deduce when events happened when you look at them”.

2. Fast transactions

One of the main advantages of Solana over Ethereum is that there is no waiting period between processing a transaction and confirming it on the blockchain. While Solana transactions can be accepted almost instantly, Ethereum’s waiting period typically lasts about four minutes.

Because transactions take less time to process, Solana is a greener solution than the gas-intensive Ethereum blockchain, making SOL’s efficiency even more attractive than its predecessor. .

NFT creators and buyers were seduced by the lure of faster transaction times and more responsive markets, which played a significant role in Solana overtaking Ethereum in NFT trading volume for the first time in May 2022.

3. Minimum Transaction Fees

Bitcoins on a purple background

As for the energy-intensive nature of Ethereum, processing transactions on its congested network requires expensive fees that can range as high as $100 per transaction. Additionally, the purchase of a single NFT can cost buyers up to $250 just to get the transaction to work. The more complex a transaction is on the Ethereum blockchain, the more expensive it is.

With the cooling of the cryptocurrency ecosystem in 2022 and the launch of Ethereum 2.0, Ethereum prices have dropped. However, they still don’t come close to the extremely low costs of Solana, which has an average cost per transaction of $0.00025.

These relatively small fees allow NFT collectors to pay for the artwork and collectibles they want without losing money by funding the transaction itself.

4. Solana is gaining traction on Ethereum

Another key factor allowing Solana to surpass Ethereum is the magnitude of the momentum generated by the network and its native cryptocurrency, SOL.

In the five weeks since the launch of Solana, between August 1 and September 7, 2020, SOL grew by 428.32%. At its peak in November 2021, Solana reached a market capitalization of $63 billion and the cryptocurrency has become a mainstay of the top 10 by market capitalization.

This acceleration was a strong display of confidence in Solana’s underlying technical picture. While Solana has struggled to assert itself in an environment of falling markets, the momentum of the next bull market could favor it, instead of staying on safe stocks like Ethereum.

5. Superior utility

Finally, Solana bills itself as “Web3 infrastructure for everyone,” and its underlying numbers show that this could be the case as the next generation of the Internet continues to gain momentum.

Currently, over 21 million NFTs have been minted on Solana’s network, and its blockchain has seen over 125 billion transactions occur, all on a platform that didn’t exist before 2020.

Though it has taken a beating amid widespread market turmoil, Solana remains a rising star of utility and flexibility in the cryptocurrency landscape and could become the undisputed leader when it comes to buying, selling, and minting non-fungible tokens.

Could Solana NFTs Surpass Ethereum?

There are certainly some caveats against Solana, and his network has been vulnerable to security breaches, and new rivals continue to emerge as contenders. However, his blockchain pragmatism is beyond doubt.

Ethereum is still the star of DeFi right now, but major cryptocurrency market crashes and crypto winters like the one we are enduring today can give rise to worthwhile new ventures. If the DeFi landscape takes advantage of the recession to reconsider its allegiance to Ethereum, we could very well see a new period of dominance emerge for Solana in 2023 and beyond.

Leave a Comment