January 23, 2022

BofA: Solana Captures Ethereum Market Share

Ethereum was the first blockchain to fully implement smart contract support. This led to growth of its popularity and gave impetus to the developmentsuch sectors of the crypto economy as decentralized finance (DeFi) and non-fungible tokens (NFT). A year ago, Ethereum was an absolute with a 97% share of the volume of blocked funds in DeFi, while now its share has decreased to 62%.
BofA: Solana Captures Ethereum Market Share

Image source: defillama.com

Along with the growing demand camesignificant load on the network, for which Ethereum was not ready. To ensure security and maximum decentralization, the blockchain was built on the proof-of-work protocol, the reverse side of which was low bandwidth. Ethereum cannot process more than 20 transactions per second (TPS), which forces users to pay higher fees to be included in a block. Competition between users has led to record commissions that often exceed $50.BofA: Solana Captures Ethereum Market Share

Image source: bitinfocharts.com

The low speed and high costs of Ethereum gavepush for the development of faster blockchains. One of the promising ones is Solana, which at speeds above 50,000 TPS charges a fee of less than a cent. Solana is based on a proof-of-stake protocol and has a lower degree of stability and decentralization than Ethereum. However, this did not stop Bank of America from calling it "the potential VISA of the digital ecosystem."

Thus, in the last financial year, VISA processed165 billion transactions, during the same time Solana - over 50 billion. Solana entered the NFT market only in August, but now there are over 6 million digital objects based on it.BofA: Solana Captures Ethereum Market Share

Image Source: Cryptocurrency Exchange StormGain

Solana is a young project that continuesfight childhood illnesses. Last year, the network fell several times due to ddos ​​attacks on one of the decentralized exchanges, and Solana Labs management did not immediately recognize the problem. Solana’s ability to continue to take market share from Ethereum depends largely on the ability of developers to resolve complications in a short time.

Analytical group StormGain

(platform for trading, exchanging and storing cryptocurrency)

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