Alkesh Shah, digital assets strategist at Bank of America, predicted that Ethereum rival Solana would become “Visa for the digital assets ecosystem” in a research note on Tuesday.
Launched in 2020, Solana Network has since increased its original SOL token to become the fifth largest cryptocurrency with a market value of $ 47 billion. An order of magnitude faster than Ethereum, it has been used to process over 50 billion transactions and over 5.7 million non-fungible tokens (NFT).
Critics, however, argue that speed is at the expense of decentralization and reliability, but Shah believes the pros outweigh the cons:
“Its ability to deliver high throughput, low cost and ease of use creates a blockchain optimized for consumer cases such as micropayments, DeFi, NFTs, decentralized networks (Web3) and games.”
He went on to suggest that Solana is taking a share of the Ethereum market due to low fees, ease of use and scalability, while Ethereum can be translated to “value-added transactions, identity, storage and utilities in the supply chain.” Shah wrote, according to Business Insider.
“Ethereum prioritizes decentralization and security, but at the expense of scalability, leading to periods of network congestion and transaction fees that sometimes exceed the value of the transaction being sent.”
Visa processes an average of 1,700 transactions per second (TPS), but in theory the network can handle at least 24,000 TPS. Ethereum currently processes around 12 transactions per second on its main network (more on a two-tier team), while Solana has a theoretical limit of 65,000 transactions per second.
“Solana prioritizes scalability, but the less decentralized and relatively secure blockchain has its drawbacks, as evidenced by many network performance issues from the outset,” acknowledged Shah.
Solana has experienced more than its fair share of network performance issues in recent months, such as the withdrawal issues recently confirmed by Binance on Wednesday, the delay in social media performance reporting on Friday, and the distributor’s denial of service attack in January. Although Solana denied that this was the case.
Related: Decentralized and scalable exchange uses Solana to enhance the trader experience.
This came less than a month after the previous attack on December 10, when there were reports of network congestion caused by mass mobilization related to the initial DEX offer on the decentralized exchange platform Raydium in Solana.
In an interview with Cointelegraph on December 22, Austin Federa, Head of Communications at Solana Labs, said that developers are currently working on solving network problems, especially when it comes to improving transaction scaling:
«Solana runtime is a new design. It does not use EVM [Ethereum Virtual Machine] and many innovations have been made to ensure that users receive the lowest fees, but there is still work to be done while driving. “