In research published Tuesday, Bank of America’s digital asset strategist Alkesh Shah predicts that Ethereum competitor Solana could become the “Visa of the digital asset ecosystem“.
The Solana network was launched in 2020 and its native token, SOL, has since become the fifth largest cryptocurrency with a market cap of $ 47 billion. With far faster speeds than Ethereum, Solana handled over 50 billion transactions and the minting of over 5.7 million non-fungible tokens (NFTs).
Although skeptics argue that its speed comes at the expense of decentralization and reliability, Shah believes the benefits outweigh the drawbacks:
“Its capabilities to deliver high throughput, low cost and ease of use make it a blockchain optimized for consumer use cases, such as micropayments, DeFi, NFT, decentralized networks (Web3) and gaming.”
As quoted by Business Insider, Shah suggests Solana is slowly stealing market share from Ethereum thanks to its low fees, ease of use and scalability. Conversely, Ethereum could be relegated to “high-value and identity transactions, storage and supply chain use cases“.
“Ethereum prioritizes decentralization and security, but at the expense of scalability, leading to periods of network congestion and transaction fees that are occasionally higher than the value of the transaction sent.
Visa processes an average of 1,700 transactions per second (TPS), but the network can theoretically handle at least 24,000 TPS. Ethereum currently runs around 12 TPS on its core network (much more on layer-two), while Solana boasts a theoretical limit of 65,000 TPS.
Nonetheless, Shah admits that “Solana prioritizes scalability, but is a relatively less decentralized and secure blockchain, leading to trade-offs highlighted by several network performance issues right from the start.“.
Over the past few months, Solana has blamed several network difficulties, such as withdrawal issues confirmed by Binance Wednesday, poor network performance reports shared on social media this Friday, as well as what appeared to be a distributed denial-of-service attack on January 5. , despite denials from developers.
Related: Decentralized and Scalable Exchange leverages Solana for a better experience
The latter case follows the previous attack on December 10, accompanied by reports of network congestion caused by mass botting associated with an IDO on Raydium, a decentralized exchange on Solana.
In an interview with Cointelegraph on Dec 22, Austin Federa, chief of communications at Solana Labs, reported that the developers are working to fix the network’s problems:
“The Solana runtime is a new design. It doesn’t use EVM [Ethereum Virtual Machine]. A lot of innovation has been made to ensure that users get the cheapest rates possible, but there is still a lot of work to be done on the runtime. “