In the past weeks, we have seen a sharp growth in layer 1 blockchains that could pose a threat to Ethereum. The blockchain trilemma, scalability, security and decentralisation is at the heart of the emergence of new big layer 1 blockchains. Competitors are trying to create a fast and scalable network, without compromising on its security or decentralisation.
Solana, in particular, emerges as a potential challenger to Ethereum’s supremacy. Avalanche, to a lesser extent, also has interesting features to look at. Mainstream blockchains such as Cardano, Binance Smart Chain, Polkadot, Cosmos or Terra, on the other hand, are still continuously working on improved versions, raising the standard of this vast ecosystem.
Avax, Sol and ETH performance since April 2021
Solana, an impressive launch and success (Sol)
Solana has recently impressed the community by its traction and got hype momemtum with increasing demand for NFT tokens. Part of FTX group but with a start-up approach, Solana was only recently launched (March 2020) and is among the few protocols achieving over 1,000 TPS (transaction per second). The project even claims its maximum throughput is more 50,000 TPS, with over 200 nodes on the current testnet — making it by far the most performant blockchain network. In comparison, proof of work systems like Bitcoin support approximately 5 TPS while Ethereum currently averages around 13 TPS. This makes Solana around 10,000 times faster than Bitcoin and 3,800 times faster than Ethereum.
Solana uses an interesting combination of proof of stake (PoS) and proof of history (PoH) consensus mechanisms to improve throughput and scalability.
PoH is one of Solana’s core innovations and can be seen as a new timekeeping method enabling nodes to agree on the time order of the events on the chain, without having to talk to each other. PoH is not a consensus protocol but rather a decentralised clock that helps secure the blockchain and works before the network reaches consensus. It reduces the processing power necessary for transactions making Solana’s leading throughput possible.
Another core innovation is Solana’s mempool system (contraction of memory and pool), Gulf Stream, that forwards the transactions to validators before the previous set of transactions are even finalised. This helps maximise transaction confirmation speed, as well as the concurrent and parallel transaction capacity of the network.
Those new innovative and popular features have led to a strong increase in the number of users of Solana blockchain that culminated, mid-September, in an outage due to the saturated network. It forced the network to stop the processed transactions for one day. This is unfortunate but will not stop Solana from expanding and reaching new levels of activity.
Avalanche, a focus approach on interoperability (Avax)
Created by Ava Labs, a company led by Cornell University researcher Emin Gün Sirer, Avalanche was launched in September 2020 with a focus on speed, low transaction costs and interoperability. As each blockchain has its strengths and weaknesses, and no blockchain can meet every requirement, interoperability is key to smoother operations. The launch of the Avalanche-Ethereum Bridge, early 2021, attracted much attention from the DeFi community allowing users to transfer DeFi tokens and programs from the Ethereum network to Avalanche. It has already seen over $1 billion in assets transferred since launching a month ago.
Avalanche, which is similar to other platforms such as Polkadot and Cosmos, nevertheless has a higher throughput and decentralised potential. It has the possibility to scale to millions of validators, all of them operating in consensus. Avalanche also introduced a $180 million liquidity mining incentive program in an effort to entice developers to begin exploring its blockchain. The blockchain added DeFi protocols Aave, Curve and Sushi as part of the program.
While the emergence of new challengers to Ethereum cannot be ignored, Ethereum 2.0 is well engaged in its gradual migration from PoW to PoS consensus. That will release the pressure off the blockchain and will, most probably, allow Ethereum to maintain a dominant position within the ecosystem.
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