Ethereum vs Solana: Detailed Comparison of 2 Blockchains

Solana’s rapid rise in popularity due to its vast capabilities and high efficiency has many worried about Ethereum’s dominance.

And yet, Ethereum remains at the center of all things DeFi and serves as a stable foundation for the existence and development of an entire sector.

Let’s take a closer look at these two blockchains and try to better understand how solid the Ethereum vs Solana rivalry is given their technical solutions, industry, and market position.

Ethereum

Key Features: 

• Ethereum Virtual Machine and Smart Contracts
• Enables rich DeFi, DApps, DEXs, DAOs ecosystem
• Provides a unified and stable foundation for DeFi projects

What Are Ethereum, EVM, and Smart Contracts?

Ethereum, founded in 2015 by Vitalik Buterin and a few other co-founders, turned the entire crypto industry upside down by offering a new more than blockchain network, but an entire so-called Ethereum Virtual Machine (EVM) and the Solidity programming language.

This essentially became a decentralized network computer capable of performing more complex operations than just transactions between network participants.

Of course, in the end it all comes down to transactions, but this allowed the creation of Smart Contracts, or otherwise decentralized programs that run inside the EVM, containing a specific set of conditions that must be met for a transaction to take place.

These became the basis for what many of us are now familiar with as individual Decentralized Protocols like Avalanche, Compound, Aave, and the Decentralized Apps built on top of them, as well as Decentralized Exchanges like Uniswap and entire Decentralized Autonomous Organizations like MakerDAO.

In other words, if you’re familiar with how websites work, the EVM has done for blockchain developers what the Java Virtual Machine once did for regular web developers.

The JVM has taken over memory, computation and other low-level logic, allowing developers to program only business logic for a particular company or service, and allowing the company to ensure that the best development principles and practices are embedded at the core.

What are Ethereum’s Technical and Market Numbers?

Ethereum used to have a Proof of Work (PoW) consensus mechanism, but after the Ethereum 2.0 Proof of Stake (PoS) transition, that has significantly increased to 30 TPS (although potentially this mechanism suggests up to 100 TPS is possible).

While the cost of transactions is highly variable, this has made their value roughly from 1-2 USD.

Thus, as of August 2024 Current Total Supply is 120,298,917.45 and the Market Capitalization is $316,239,999,888.00.

Total Value Locked (TVL) which reflects how much total value of all assets locked into smart contracts on a blockchain project or platform – is about $44B, but this value changes over time.

Speaking of main tokens Solana vs Ethereum price, we see a difference of multiple times, namely for August 2024 Ethereum $2578.75 and Solana $153.92. We have to take into account the central position of Ethereum in DeFi as well as the recently launched Ethereum ETFs, which is strongly fueling its value and multiple interests. However, when it comes to Solana vs Ethereum price prediction, many estimate that Solana’s chances of catching up with Ethereum are quite high at some point, especially with the recent value growth, technology sustain development, and launching Solana ETFs.

Speaking of additional assets like Ethereum NFT vs Solana NFT – at the moment there is a clear dynamic. Despite the Ethereum NFT being older and wider, Solana just exceeded Ethereum showing higher NFT royalty earnings with $2 million vs $1.3 million, respectively. Solana NFT is growing very fast, much faster than all the others on the market, and is a real competition in this

Solana

Key Features:

• High throughput and low fees
• More advanced Proof of History (PoH) mechanism
• Highly flexible, efficient, and scalable Programs (Smart Contracts and Decentralized Applications)

What Are Solana Blockchain and Solana Programs?

The founders of Solana decided not to follow the path of other DeFi projects and bypass the limitations of EVM by writing everything from scratch in fast and efficient Rust, making it the main language of their platform.

They replicated the features of decentralized applications, but did not create a separate decentralized virtual machine that takes over the logic of computation, but instead proposed to write all the logic in directly executable Smart Contracts.

Smart Contracts in the Solana system are called Programs, they use Rust as a native language and combine both business logic and logic of calculations, memory management, and other things, which gives full control and maximum flexibility.

This enabled the same DeFi features as Ethereum but maximized computational efficiency, low latency, and cheap transactions. 

You can think of it as an alternative to the Java Virtual Machine, where you have to first program the server by writing the logic of computation, memory management, and so on from scratch, and only then write the business logic of a particular company or service on top of that. Yes, this is extra work, but it is rewarded because you can achieve incomparably faster and cheaper operation of your server.

What Are Solana’s Technical and Market Features?

Solana uses the more advanced and efficient PoH consensus mechanism as a foundation, but also uses PoS addition, which allows it to achieve up to 100 thousand TPS.

Nevertheless, such a figure has not been achieved, ‌Solana shows higher actual TPS with several times lower latency.

Therefore, Solana fees vs Ethereum do not speak in favor of the second and are usually many times less at about $0.11, although they are also variable.

Unlike Bitcoin, and Ethereum 2.0 there is no limit on token issuance here, but Solana uses planned cutting in mining rewards as well as token burning as deflationary mechanisms.

Solana thus shows a Current Total Supply of 583,198,739 with a Market Capitalization of $69.66B. Its LVT value is noticeably lower at only $4B, but the network launched later and the ecosystem itself is much smaller at the moment, so we need to interpret these numbers accordingly.

Ethereum 2.0 vs Solana

Among its advantages is that Ethereum has become a comprehensive and established solution that has created a very broad ecosystem of applications around it. 

This is possible because Ethereum offers not only some standardization of development and Solidity as the main tool for the underlying logic behind Smart Contracts, but also allows the use of programming languages such as JavaScript, Python, and Java, which also makes it easier entry point for many developers wishing to run their projects based on EVMs.

This standardization has made Ethereum a stable, and secure enough solution that, even with some costs, meets the expectations of developers and users and encourages them to continue to make it the foundation of their developments.

Also, Ethereum can also be called one that continues to adhere to key Web3 concepts like decentralization, and its EVM architecture and PoS choice don’t provide as much potential opportunity to take over the network, even with large numbers of validators or high computing power.

However, this to some extent becomes a disadvantage which although remedied by L2 solutions like Avalanche, Compound, and Aave, still imposes speed and transaction cost limitations in the very core that remains unsatisfactory for some, and Solana looks much more advantageous here.

On the other hand, the advantages of Solana are obvious, and they directly beat the disadvantages of even Ethereum 2.0, namely the efficiency and cheapness of transactions.

And while many people love the technology part of Web3, when business comes into play these factors become key, which inevitably creates an inflated interest in the solution.

Also, Solana is actively trying to get ahead of Ethereum in one of the key challenges in crypto adoption, namely the user experience gap between Web2 and Web3. Despite Ethereum’s rich ecosystem, it’s still an isolated solution for so many, while Solana is doing a great job of seamlessly integrating with key payment providers like Apple Pay, and social networks like X, which is just the most prominent of many other examples.

Another very important factor is breaking the barrier for developers, who are responsible for creating many solutions. Although Ethereum allows the use of JavaScript, Python, and Java in its ecosystem, the native language is still Solidity, which is not ready to be used anywhere other than writing smart contracts.

And it requires a bit of extra effort from developers to master this tool. This is a fundamentally different level of entry as opposed to Rust, which is very widely used and well-loved outside of blockchain. Rust developers have to learn a new project, but not master a separate tool to get in.

However, no technology is perfect and Solana has the technical risks of centralization when using PoH if too many assets and computing power end up in the same hands. Such a thing could undermine the very core of the company’s existence, although the practical likelihood of that happening is not great.

Also, despite the popular Rust language outside the blockchain and all the advantages it offers in terms of full control and flexibility, it is objectively a more complex, close to low-level programming language, which makes development on Solana more time-consuming and labor-intensive, which businesses don’t like either.

Conclusion

Ethereum and Solana are the two key players in the crypto industry after Bitcoin, on which most people are placing their main bets regarding their value for investors and impact on the development of the entire Web3.

Speaking about Ethereum vs Solana at the moment, the first one is still superior because of the earliest launch, being the foundation and standard for the whole DeFi, having the richest ecosystem, and keeping the highest impact on the entire Web3.

Speaking about Solana vs Ethereum long-term competition, opinions are divided and some believe that just as Ethereum became so-called blockchain 2.0, Solana will become blockchain 3.0, retaining the capabilities of the previous one but greatly expanding them and implementing them much more efficiently.

Others believe that Ethereum is too fundamental and universal, and will rather remain the main driver of Web3 development, while the others will create beneficial competition and be a more suitable alternative in certain scenarios.

Some believe if we reach blockchain limitations some other players like Constellation, IOTA, or Hedera will give the so-called blockchain 3.0, which retains the principles of its predecessors but takes the possibilities to a whole new level through other technologies like directed acyclic graphs.