What is Solana: Did it manage to kill Ethereum?

January 8, 20254 min read

TLDR;

Solana is a layer one blockchain that initially wanted to solve Ethereum�s shortcomings
It uses the proof of stake consensus mechanism and supports staking instead of mining
It supports decentralized applications, non-fungible tokens, and memecoins

Although Bitcoin is the first and most popular blockchain and cryptocurrency, it used a very slow consensus mechanism and wasn�t open to developers tapping into the network to run applications. Ethereum solved these issues and eased interaction with third-party developers something that gave rise to decentralized finance (DeFi) and non-fungible token (NFT) projects. Unfortunately, the Ethereum consensus mechanism wasn�t fast enough, encouraging the creation of Solana which initially labelled itself as �the Ethereum killer.� So, what is Solana and has it managed to kill Ethereum?

What is Solana?

Solana is a layer one blockchain or decentralized network created by Anatoly Yakovenko, a former Qualcomm executive, in 2017 and officially launched in 2020. The blockchain is managed by the Solana Foundation. At the time, the Ethereum blockchain was still using the Proof of Work (PoW) consensus mechanism which is characterized by slow transaction speeds processing 15-30 transactions per second (TPS).

Solana beat this speed by offering a theoretical speed of 710,000 TPS but actually processes 65,000 transactions per second. Solana offers these speeds by using a superior and different consensus mechanism known as Proof of Stake or PoS.

Unlike PoW which requires blockchain users to use computing power to verify transactions, PoS works by allowing blockchain users to stake or lock the blockchain�s base asset, SOL, in a wallet to verify transactions. Those who participate in Solana staking receive a section of the transaction fees charged and the stipulated staking rewards.

A superior TPS saw Solana dubbed as the Ethereum killer since it allowed developers to create projects supporting simultaneous users like DeFi applications. Apart from a higher TPS, Solana employs a highly scalable architecture, decentralization, web3 tools, and boasts of low transaction fees.

According to the blockchain�s website, Solana is:

�Powerful for developers. Fast for everyone [...] Bring blockchain to the people. Solana supports experiences for power users, new consumers, and everyone in between.�

What sets Solana apart from other blockchains?

Solana differs from other blockchains like Ethereum and Bitcoin due to its focus on user experience (UX) to solve most blockchain shortcomings and make it easy for novice developers to use the network. Also, Solana�s scalability isn�t largely hinged on scaling networks as is the case with Ethereum and Bitcoin.

How Solana blockchain works

Solana works like any other PoS-based blockchain but with a twist - it uses two consensus mechanisms. Apart from proof of stake, it also uses the proof of history (PoH) mechanism. The two mechanisms handle different tasks on the blockchain.

The blockchain�s PoS system handles transaction verifications, selects validators, and ensures the network is secure. On the other hand, the Solana PoH mechanism ensures transactions are ordered in a chronological order providing a historical record of transactions. The PoH system works by timestamping transactions.

The Solana (SOL) token

SOL is Solana�s base currency and 500 million tokens were generated during the blockchain�s launch. As of January 2025 there are 483.5 million SOL tokens in circulation. Solana increases the supply of tokens by 8% annually but later reduces it by 15% with a goal to stabilize the increase at 1.5% annually.

SOL is used for various blockchain activities like paying transaction fees, governance, interacting with decentralized applications (DApps), and staking.

Top projects on Solana

Top Solana projects that have recorded noticeable growth in 2024 and are poised to attract more usage in 2025 are:

Pump.fun - This is a memecoin-focused project that simplifies the creation and launching of Solana-based memecoins. The platform�s popularity has seen it contribute over 70% of all tokens issued on the blockchain at some point in January 2025. It also accounts for over 50% of DeFi trading activities on the network.

Solend - It�s a decentralized platform that supports lending and borrowing virtual currencies on the Solana protocol.

Mad Lads - This is an NFT project. Mad Lads� creator recently acquired defunct exchange FTX�s Europe business.

Others - Most of Solana�s leading projects are in the NFT and DeFi sectors. Top platforms include Jito, Marinade Finance, Kamino, Marginfi, Drift, Orca, and Jupiter.

Has Solana killed Ethereum?

No. Why? When Solana was launching, Ethereum was transitioning from a PoW to a PoS system, something that diluted Solana�s leverage against Ethereum. Although Solana has seen an uptick in activities, including surpassing Ethereum in terms of DEXs trading volume, Ethereum leads in most areas including activities in DeFi, NFTs, and decentralized apps.

Solana�s ongoing upgrades and popularity make it a worthy Ethereum competitor but it will take time before Solana overtakes Ethereum.