In a Jan. 11 research note, Bank of America digital asset strategist Alkesh Shah predicted that ethereum competitor Solana could become “the visa of the digital asset ecosystem.”
Launched in 2020, the Solana network has grown to become the fifth-largest cryptocurrency by market cap at $47 billion. It is an order of magnitude faster than Ethereum and has been used to settle over 50 billion transactions and mint over 5.7 million non-fungible tokens (NFTs).
However, critics argue that its speed comes at the cost of decentralization and reliability, but Shah argues that the pros outweigh the cons:
“Its ability to provide high throughput, low cost, and ease of use creates a blockchain optimized for consumer use cases such as micropayments, DeFi, NFTs, decentralized web (Web3), and gaming.”
He went on to say that Solana has taken the market share of Ethereum, which could be categorized as “high-value transactions and identity, storage and supply chain use cases” due to its low fees, ease of use and scalability, writing Doshah as lead via Business Insider
“Ethereum prioritizes decentralization and security at the expense of scalability, which leads to periods of network congestion and transaction fees that can sometimes be greater than the value of the transactions being 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 processes around 12 TPS on mainnet (more on the second layer), while Solana has a theoretical limit of 65,000 TPS.
Shah admits, “Solana prioritizes scalability, but there are trade-offs for a relatively less decentralized and secure blockchain, as illustrated by several network performance issues since its inception.”
Solana has experienced more than its fair share of network performance issues over the past few months, such as recent withdrawal issues comfirmed Binance released on January 12, Report The delayed performance on social media on January 7 and what appears to be January 5 DDos attack, although Solana denies this is the case.
This is less than a month after the last attack December 10, the network congestion is reported by massive robot associated with a December Initial Offering (IDO) of Solana-based decentralized exchange platform Raydium.
In an interview with Cointelegraph on Dec. 22, Austin Federa, Communications Supervisor Solana Labs said developers are currently working to resolve network issues, particularly related to improving transaction metering.
“Solana’s runtime is a new design. It doesn’t use the EVM [Ethereum Virtual Machine] And there’s been a lot of innovation to make sure users get the cheapest possible fee, but there’s still work to be done at runtime. ”