Both Solana and Ethereum offer smart contract capabilities on their networks. Anyone can create a smart contract and upload it onto the network. However, the two networks have different ways of verifying interactions with smart contracts and transactions on the chain that affect how useful they are.
Ethereum and the “Proof of Work”
Users contribute computing power to the network to help determine which transactions are legitimate. In exchange for contributing power, users are rewarded for verifying transactions.
Currently, the Ethereum network can process about 10-15 transactions per second.
Solana and “Proof of History”
Solana’s verification system works by storing all transaction data in chronological order using a VDF or verifiable delay function. This is to ensure the data is in the correct order. Once the data is sorted, it can be distributed for verification.
Solana’s proof of history network can handle up to 50,000 transactions per second. In comparison, Visa can handle approximately 1,700 transactions per second.
Why does TPS (transactions per second) matter?
People talk a lot about a token’s transaction per second (TPS) when talking about crypto. This is because TPS determines the gas price when sending a transaction.
Gas Price: The fee associated with successfully executing a contract on a blockchain.
Ethereum is having a significant problem right now. The Ethereum network cannot keep up with the number of transactions being made on its network.
This backlog results in high gas prices and longer transaction times for the Ethereum Token and NFTs.
On average, to buy an NFT on OpenSea, the gas price is around $100-200 per transaction. And during times of large mints it can reach over $500.
This is why the Solana network and token is growing so quickly in the NFT space.
Solana’s proof of history structure allows for an extremely high TPS and low gas fees.
On average, the gas price on the Solana network is $0.00025. This extremely low transaction fee is the key propellant to the fast-growing Solana NFT Ecosystem.
The Current Size of the Two Networks
Etherium is a far more established blockchain with over 7,000 nodes and over $400 billion in total market cap.
Solana’s market cap is quickly rising and is currently listed at $60 billion. The Solana network also has only about 700 nodes up so far.