Bank of America’s digital assets strategist Alkesh Shah said in a research note dated Nov.
The Solana network was launched in 2020 and has since grown to become the fifth largest cryptocurrency with a market capitalization of $ 47 billion. It’s an order of magnitude faster than Ethereum and has been used to process over 50 billion transactions and mint over 5.7 million non-fungible tokens (NFTs).
However, critics argue that its speed comes at the expense of decentralization and reliability, but Shah believes that the advantages outweigh the disadvantages:
“The ability to offer high throughput, low cost, and ease of use creates a blockchain that is optimized for consumer use cases such as micropayments, DeFi, NFTs, decentralized networks (Web3), and gaming.”
He went on to say that Solana takes some of Ethereum’s market share because of its low fees, ease of use, and scalability, while Ethereum may be relegated to “high quality transaction and identity, storage and supply chain use cases” in Shah, as quoted from Business Insider
“Ethereum prioritizes decentralization and security, but at the expense of scalability, which has resulted in times of network congestion and transaction fees that are sometimes higher than the value of the transaction being sent.”
Visa processes an average of 1,700 transactions per second (TPS), but the network can theoretically process at least 24,000 TPS. Ethereum currently processes around 12 TPS on the mainnet (more on layer two), while Solana has a theoretical limit of 65,000 TPS.
Shah admits that “Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has tradeoffs, exemplified by several network performance issues since its inception.”
Solana has had more than a fair share of network performance issues over the past few months, most recently with withdrawal issues Confirmed by Binance on January 12th Reports the late performance on social media on January 7th and what appears to be a DDos attack on January 5thalthough Solana denies this.
Related: Solana uses a decentralized and scalable exchange for an improved trading experience
This happened less than a month after an earlier attack on December 10th, with reports of network congestion caused by Bulk filling associated with a Initial Dec Offering (IDO) on Solana-based decentralized exchange platform Raydium.
In an interview with Cointelegraph on December 22nd, Austin Federa, Head of Communication from Solana Labs, said the developers are currently working on addressing the network’s issues, particularly those related to improving transaction measurement.
“The Solana term is a new design. It doesn’t use EVM [Ethereum Virtual Machine] and a lot of innovation has been done to ensure users have the cheapest fees, but there is still a lot to be done about the run time. ”
