Solana Network Poised to Surpass Ethereum in Transaction Fees
Summary:
Solana's network is reportedly set to outpace Ethereum in transaction fees, potentially establishing Solana as a so-called “Ethereum-killer." The predictions, made by Dan Smith, a senior research analyst at Blockworks, suggest Solana could surpass Ethereum's transaction fees and captured Maximum Extractable Value (MEV) within a month. Despite this, Solana's daily transaction fees remain significantly lower than Ethereum's and its total value locked (TVL) is only around 7.4% of Ethereum's network. Furthermore, while Solana promises better scalability and efficiency than Ethereum, the latter's past network outages have attracted criticism.
Solana's network appears to be in a position to even eclipse Ethereum in terms of transaction fees, potentially marking a pivotal moment for the Solana network which is frequently hailed as an “Ethereum-killer." It is predicted by Dan Smith, a senior research analyst at Blockworks, that Solana may surpass Ethereum's transaction fees and captured MEV within this month, possibly even this week. Captured MEV, a.k.a Maximum Extractable Value, pertains to revenues primarily obtained via arbitrage trading on these platforms. This yardstick quantifies the supreme worth that a user or user group can derive from a blockchain.
On May 7, Solana's total economic value of $2.8 million closely trailed Ethereum's $3.1 million, according to Smith. "Total economic value" is defined as the sum of transaction fees and captured MEV returned to validators. The preceding day's values were: Ethereum at $3,165,772 and Solana at $2,803,313.
However, Solana's daily transaction fees are a considerable distance from Ethereum's. Over the past 24 hours, Ethereum raked in $2.75 million worth of fees, while Solana reaped a lesser $1.49 million, as per DefiLlama statistics. In terms of Total Value Locked (TVL), Solana’s TVL of $3.94 billion is a mere 7.4% of the much larger $53 billion TVL of the Ethereum network.
Dubbed an “Ethereum killer," Solana debuted on the mainnet in March 2020, boasting a claimed throughput of a whopping 50,000 transactions per second (TPS) and promising to rectify Ethereum's scalability and inefficiency issues. Contrasting with Ethereum's modular strategy for scalability through layer-2 (L2) scaling solutions, Solana's all-in-one method seeks to engender scalability and minimal fees as an independent blockchain network.
However, the Solana strategy faced extensive critique in the wake of its past network failures. In early April, overwhelming demand for memecoins caused nearly 75% of all Solana transactions to hang in the balance, as the network grappled to accommodate the high demand. On February 6, Solana's block creation ceased for roughly five hours, until engineers and validators managed to reboot the network, as reflected on Solana’s status page.
Published At
5/8/2024 2:58:52 PM
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