Solana Overtakes Ethereum On Google Trends For The First Time
Ethereum has been doing the heavy lifting for decentralized finance (DeFi) and NFT (non-fungible token) marketplaces so far. Will Solana become the new smart contract torchbearer? Or will decreased NFT activity level things out once again?
SOL in a Neck-to-Neck Race with ETH on Google Trends
Last week, we broke down Solana vs Ethereum prospects considering that the former outperformed Ethereum by over 500%. We touched on Solana’s unique tech that combines Proof-of-History (PoH) with Proof-of-Stake (PoS), its massive transaction speed of up to 50,000 tps, and the number of dApps and nodes.
True to the forecast, the “interest over time” metric on Google Trends shows that Solana managed to surpass Ethereum twice during the last week; once on September 7 and again on September 9 (yesterday). This is extremely impressive given the disparity between the number of dApps available – 400 vs Ethereum’s 2,840.
Solana’s key catalyst to make this happen was most likely the frenzied NFT marketplace. In August alone, Ethereum’s top dApp for NFTs – OpenSea – accounted for $3.4 billion in trading volume. Since then, it has declined by 67% from its August peak. However, the slump was still barely a blip on the radar considering that NFT traffic has increased 10 fold since July.
This record-high activity in speculative digital assets spilled over to Solana NFT dApps. Among these, the top performer is Solanart, which has been carried on the back of the success of Degen Apes Acadamy.
The top SolPunk – SolPunk#7804 – sold for 3,500 SOL ($618,275 at press time price).
While NFT mania is boosting Solana into public consciousness, a far more important factor comes into play for the long haul beyond NFTs – gas fees.
Massive Gap Between ETH vs SOL Gas Fees
Gas fees are microtransactions that pay for the use of the decentralized blockchain network. Therefore, users hosting these network nodes are incentivized to keep the DeFi revolution going. Each blockchain handles gas fees differently, based on complex algorithms.
In its official documentation, the Solana team has always made a point to avoid Ethereum’s wildly fluctuating high fees. Instead, Solana opted for a congestion-driven model, instead of a non-deterministic one.
“It smells of exactly what we dislike about Ethereum’s “gas”, non-determinism.”
Ethereum is no stranger to losing market share to competition because of prohibitively expensive transactions. In May, we had reported that Binance Smart Chain (BSC) surpassed Ethereum by nearly 600% because of this reoccurring issue. How big of a disparity are we talking about now between SOL and ETH gas fees?
Ethereum’s current gas fee is 114 gwei. This unit is a one-billionth denomination of ETH: 1 ETH = 1 billion gwei. The simplest transactions cost around 21,000 gas. Altogether, when we multiply 114 gwei with 21,000, we arrive at 0.002394 ETH or $8.09 per transaction.
In contrast, Solana has a relatively stable fee of about $0.00025 per transaction. Meaning, Ethereum is 32,000 times more expensive to use for basic dApp transactions. Of course, more complex transactions reserved for yield farming on decentralized exchanges and lending protocols would cost even more.
Time Race Between Smart Contract Platforms
As we noted previously, Solana doesn’t need to go through a PoS upgrade like Ethereum. On the other hand, the weight of developers, diversity of dApps and NFTs is on Ethereum’s side. Furthermore, it is now apparent that NFT waves come and go.
Between these waves there is an opportunity for Solana’s user retention. And the longer these windows remain open while ETH gas fees remain high, the more likely it is that Solana will catch up. Because of its growing traction, the blockchain upcomer had already overtaken Ripple (XRP) and is now positioned at 3rd rank, right behind Bitcoin (BTC) and Ethereum (ETH).
According to Vitalik Buterin, the full Ethereum 2.0 won’t arrive until late 2022. This is quite a long window of opportunity for Solana to exploit. After all, keep in mind that the entire DeFi space only emerged as a cohesive ecosystem last summer.
Do you think the speculative nature of NFTs make them alluring to only a certain type of personality? Have you considered buying one in the hopes of getting 100X gains? Let us know in the comments below.