Understanding the differences between Solana (SOL) and Ethereum (ETH) can help you improve your trading results and overall market comprehension. These projects provide Dapp developers with flexible programming environments to create applications and tokens. However, when you dive deeper, there are some glaring differences between the projects.
What is Solana (SOL)?
Solana was built to improve on many of the shortcomings of Ethereum. The network focuses on scalability and transaction throughput. As such, it is regarded as a high-performance blockchain. It uses a unique multi-layered consensus structure to eliminate bottlenecks and centralization.
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One of the main advantages Solana brings to the market is that it automates the transaction ordering process for blockchains. This is how the protocol is able to achieve such high tps rates. Additionally, the Solana project is open source, so third-party developers can build using the platform's infrastructure.
What is Ethereum (ETH)?
Ethereum is one of the pioneers of the crypto market. As the first second-generation cryptocurrency, Ethereum changed the market forever. Notably, Ethereum was the first smart contract programmable blockchain. Smart contracts improved the functionality of blockchain networks exponentially. It would be hard to imagine a blockchain industry without smart contracts today.
Ethereum operates as the world's largest Dapp and DeFi ecosystem. Notably, Ethereum is not a cryptocurrency but is often confused with its utility token, Ether (ETH), which is used to fuel network transactions and smart contract executions. Ethereum is the blockchain that supports these EVM (Ethereum Virtual Machine) computations.
Development
Solana launched during the height of the 2017 crypto breakout. The network was founded by Anatoly Yakovenko. The Solana team includes some notable tech execs. For example, Greg Fitzgerald, Solana’s CTO, worked for Qualcomm, Dropbox, and other well-known platforms.
Over the course of 2018-2019, Solana hosted a variety of crowdfunding and private funding rounds. These efforts resulted in the network securing +$20 million to expand the ecosystem. The Solana mainnet went live officially in March 2020. The launch was quickly followed by a partnership with the DEX (decentralized exchange) Serum.
Ethereum's Launch
Ethereum launched when the crypto market was still taking flight in 2013. The project's founder, Vitalik Buterin, had been a long-time Bitcoiner. He saw the potential of enabling protocols to function across decentralized networks, and he wanted to simplify the process of accomplishing this task.
Ethereum Network Stats – Ethereum Stats Dashboard
The hype surrounding Ethereum's launch was memorable. The project hosted one of the largest ICOs (initial coin offerings) of the time when it secured $18 million in funding from 11,000+ investors. This moment would be the start of Ethereum's rise to power. Only 4 years later, Ethereum would launch the 2017 ICO craze when it introduced the ERC-20 token standard to the market.
Purpose
Solana was built to support advanced Dapps. The network’s developers made scalability the premier focus of the project. Every aspect of the network has been optimized to improve responsiveness and throughput. In this way, developers can create more expansive Dapps and conduct larger computations with lower fees using Solana.
Ethereum's goal was to provide Dapp developers with a reliable and safe network to work within. The protocol added smart contract scripting functionality to blockchains, improving the overall functionality and usability of cryptocurrencies. Notably, Ethereum is flexible in terms of programming languages. Developers can create using Solidity, C++, Java, JavaScript, Python, Ruby, and more.
Consensus
One of the most unique aspects of Solana is its multi-layered consensus system. The network leverages a Proof-of-Stake (PoS) system to validate the state of the blockchain. This system enables users to earn rewards for participating as validators. Validators are chosen using a combination of random selection amongst the top token holders.
Solana (SOL) – Network Stats
This system is then layered with a Proof of History (POH) mechanism that leverages a timestamp system to improve performance further. The timestamp functions as a clock for blockchain events. This timing sequence adds more security to the entire system as it makes it even harder for hackers to alter data.
Proof-of-Work
While Ethereum originally utilized a Proof-of-Work (PoW) mechanism known as the Ethash algorithm, it has since transitioned to become a Proof-of-Stake (PoS) network. This event, which occurred in 2022, was viewed as a major upgrade, often referred to as the launch of Ethereum 2.0. It marked Ethereum's shift towards greater energy efficiency, scalability, and security.
Validators are now responsible for processing transactions and creating new blocks, requiring a stake of 32 ETH for participation or the option to join a staking pool. This transition signifies Ethereum's commitment to sustainability and long-term scalability improvements.
Scalability
Solana is one of the fastest blockchains in the market. The protocol has been bench-tested up to 29,171 tps (transactions per second). Solana's network processes block every 2.34 seconds. In comparison, Ethereum is at around 15-45 transactions per second. Ethereum confirms one block approximately every 13 seconds.
Coins
SOL is the native token for the Solana network. You can stake the token and earn passive rewards. There are 489 SOL scheduled for issuance throughout the entire life of the Solana network. This scarcity has helped Solana to provide users with a dependable store of value to HODL.
Ether (ETH) is the native token of the Ethereum protocol. The main purpose of this token is to power EVM computations. ETH is the most widely used token in the crypto market. You can use ETH to participate in most ICOs, and nearly every exchange supports the coin. While Ethereum does not have a hard cap on its total supply like Bitcoin, the implementation of EIP-1559 has introduced a fee burn mechanism for transaction fees, potentially exerting deflationary pressure on the supply of ETH.
How to Buy Solana (SOL) and Ethereum (ETH)
Currently, Solana (SOL) and Ethereum (ETH) are each available for purchase on the following exchanges.
Uphold – This is one of the top exchanges for United States & UK residents that offers a wide range of cryptocurrencies. Germany & Netherlands are prohibited.
Uphold Disclaimer: Terms Apply. Cryptoassets are highly volatile. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong..
Kraken– Founded in 2011, Kraken is one of the most trusted names in the industry with over 9,000,000 users, and over $207 billion in quarterly trading volume.
The Kraken exchange offers trading access to over 190 countries including Australia, Canada, Europe, and is a top exchange for USA residents. (Excluding New York & Washington state).
Solana Vs. Ethereum – Speed vs Experience
Both Solana and Ethereum are well-respected blockchains within the market. Solana's development team accomplished its task of creating a fast and reliable blockchain that could power thousands more transactions than Ethereum. Conversely, Ethereum is still the top-performing network in the market, with no signs of slowing. For these reasons, holding both tokens in your portfolio could be wise after completing your own research.
To learn more, visit our Investing in Solana guide or our Investing in Ethereum guide.
