Solana, the blockchain network often referred to as an “Ethereum killer,” is poised for a major upgrade this year that aims to enhance transaction processing capabilities. Coupled with the potential launch of a groundbreaking consumer app, Solana’s proponents believe that these developments could finally help the network live up to its moniker. Recent on-chain activity, an increasing number of developers, and a growing user base have contributed to Solana’s momentum, fueled in part by a resurgence in memecoins in December.
Austin Federa, the head of strategy at Solana Foundation, believes that a flood of consumer-facing applications built on Solana could lead to a “flippening” where Solana overtakes Ethereum. Lower development costs and a wider range of coding languages have attracted developers looking to transition from Ethereum to Solana. Federa expressed confidence that the majority of new consumer applications will be built on Solana in the coming years, even if they may not necessarily be the most valuable.
Henrik Andersson, Chief Investment Officer at Apollo Crypto, shares a similar prediction. While he is not as certain about a “flippening,” he believes that Solana could experience a “ChatGPT moment” by launching a highly successful app that attracts a significant number of users and capital.
However, Solana faces a challenge it has yet to overcome since its launch in March 2020. On February 9, the network experienced a prolonged network outage lasting nearly five hours due to a bug in the code. Analysts argue that Solana’s reliance on only two major clients is its biggest weakness. Pranav Kanade, portfolio manager at VanEck’s Digital Assets Alpha Strategy, believes that Solana needs to diversify its client base to be a serious competitor to Ethereum. Currently, Solana runs on a Solana Labs client and a Jito Labs client, with the latter being a fork of the former. Any bug in the Solana Labs code can halt the network, as it has done at least ten times in recent years.
Federa acknowledged the importance of reliability and uptime, but argued that downtime is not uncommon even in critical financial infrastructure. Despite this challenge, Solana’s upcoming Firedancer upgrade, which introduces an independent client, provides hope for a potential flippening.
While Solana has experienced significant growth in the past nine months, Ethereum still holds a considerable lead. Ethereum’s market capitalization of $404 billion greatly surpasses Solana’s $60 billion. The size and dominance of the Ethereum ecosystem make it difficult to envision Solana overtaking it in terms of market cap anytime soon. Ethereum’s longer track record and extensive development community also make it a preferred choice for new developers.
Mark Smargon, Founder & CEO of Fuse Network, believes that Solana is unlikely to surpass Ethereum. He sees Ethereum as a “network of networks” that serves as a testing ground for ideas that may eventually make their way to Solana. Smargon emphasized that both networks can coexist and complement each other.
Ultimately, viewing Solana and Ethereum as direct competitors may not be the most accurate approach. They have different visions and objectives, with Solana aiming for speed and Ethereum focusing on building a censorship-resistant network. Both networks have the potential to succeed in their respective goals.