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Solana vs Avalanche, which should you buy? Investors and developers are showing an interest in these alternative currencies.
The crypto market worldwide is currently in free fall. For instance, Bitcoin has decreased by nearly 70% since its peak in November 2021. Therefore, for the time being, pay attention to some developing assets that have long been eclipsed by shady long-term investors and formidable rivals like Ethereum.
Solana and Avalanche are two blockchains that have surfaced as Ethereum substitutes. These new platforms provide the same functionality as Ethereum, but at substantially faster speeds and lower transaction costs, despite having a much smaller market capitalisation than Ethereum. Solana and Avalanche, which are frequently referred to as the “Ethereum killer” by crypto experts, offer developers and investors bright futures. Let’s examine these cryptocurrency blockchains in more detail and learn how each of these currencies works, though, before concluding which one is the best replacement for Ethereum.
What is Solana?
Solana is a “Layer 1” open-source blockchain that was established in 2017 that supports smart contracts, including those using non-fungible tokens (NFTs), as well as numerous decentralised apps (dApps). Solana is regarded as one of Ethereum’s greatest rivals, with comparable capabilities as a result. (Layer 1 refers to the infrastructure and basic networks of Bitcoin and Ethereum.)
According to developers, Solana’s purpose is to compete directly with Ethereum, offering both transaction processing speed and low costs. Solana is seeking to compete with Visa and Mastercard on the same comparison.
How SOL Works
Currently, Ethereum can sustain 15 to 25 transactions per second. However, this might lead to network delays and congestion. Visa processes 1,700 transactions per second while Mastercard handles 5,000, for comparison. These two networks do, however, also levy interest and user and operator fees.
A “consensus model” is used by blockchains to verify transactions. Proof of Stake (PoS) and Proof of History are both used in the novel hybrid consensus paradigm that underpins Solana (PoH). This evidence is utilised to confirm the time and sequence of occurrences. Solana is able to perform up to 3,000 transactions per second because of its innovative protocol design.
Solana has the power to attract developers into our own proprietary network thanks to better transaction speeds and reduced costs.
As of late September 2022, Solana’s native currency, SOL, is ranked 9th on the cryptocurrency charts with a market valuation of over $15 billion (all figures are in US dollars unless otherwise stated). It was driven down by the general market slump and dropped to about $31. SOL tokens are currently in circulation in an estimated 354 million units.
What is Avalanche?
Avalanche is a proof-of-stake blockchain that supports decentralised apps and private blockchain networks, and it is another rival to Ethereum. AVAX is also one of the swiftest platforms for smart contracts. The 2018-founded Ava Labs powers Avalanche.
It is a layer 1 blockchain, just like Ethereum and Solana. However, Avalanche has an advantage over its slower and more expensive Ethereum network due to its lower processing costs and quicker transactions. With a stunning 4,500 transactions per second capacity, Avalanche is a significant rival to Ethereum.
How AVAX Works
Exchange Chain (X-chain), Platform Chain (P-chain), and Contract Chain are the three interoperable blockchains that form the foundation of Avalanche (C-chain). Digital smart assets are created and traded using X-Chain. Coordination of validators and the construction of additional subnets are made possible via P-chains. Smart contract creation is possible with C-Chain. The main network verifies and protects all three blockchains.
Avalanche offers numerous Layer 2 apps developed on its Ethereum-compatible Layer 1 smart contract platform, with uses ranging from lending and trade to games. Blockchains at Layer 1 form the foundation for Layer 2 blockchains. Developers are drawn to Avalanche because of the platform’s much lower pricing. In terms of utilisation, it is one of the leading layer 1 blockchain systems after Bitcoin and Ethereum.
The native coin of Avalanche, AVAX, is ranked as the 16th largest digital coin with a market cap of $4.9 billion and a supply that is currently in the circulation of about 296 million coins (as of late September 2022).
According to Bloomberg, citing a communication from JP Morgan to investors, Avalanche has started to reduce Ethereum’s market share as the cryptocurrency looks to develop its ecosystem.
The 81 apps in the current Avalanche DeFi ecosystem include both original applications and established protocols like Aave and Curve.
Most recently, Avalanche is focused on the Metaverse and just revealed plans for the network to proceed into its next phase of expansion. It has a $5 trillion market opportunity, according to a McKinsey & Company analysis.
Which is the better “Ethereum killer”?
Which cryptocurrency between Solana and Avalanche can win out? It relies on the qualities a blockchain needs to have in order to rival Ethereum. Developers will examine what is the greatest base to build on when creating an application, whether it is decentralised or not. Developers seek security, quick transaction times, and affordable pricing to entice users to create network effects, but more significantly, they want their applications to transfer from one blockchain to another.
Building on networks with a long lifespan is more appealing to developers. Similar to how an investor favours established companies like Apple and Amazon over less successful startups.
Since it was introduced in 2015, Ethereum has been around for a while, but the Solana and Avalanche projects are attempting to draw investors and developers to the platform. The process has been a success, and further initiatives are in development.
However, Solana is presumed to be the first choice for the best “Ethereum killer.” Solana has made it into the top 10 blockchains by market cap, but it still has a long way to go. Its low transaction costs and quick speed make SOL one of the most used blockchains in use today. This makes Solana the cheapest and fastest of the two networks.
Solana has a substantially lower average transaction cost than Ethereum ($65) and Avalanche ($1 AVAX). Both of which have much higher average transaction costs.
Other noteworthy information: To lessen traffic and boost stability, Solana and Avalanche are both implementing large network upgrades. Additionally, holders of SOL and AVAX will have incentive. That is if they stake their tokens for rewards if they’re interested in staking cryptocurrencies.
Bottomline
A glaring reminder of the fickle nature of digital currencies is the persistent powerlessness of crypto-asset values. Investors shouldn’t invest more than they can afford to lose and should measure prospective returns against their own risk tolerance. In conclusion, I can say that Solana is the ETH killer.
