Ethereum vs Solana: Battle of the Layer 1 Giants

By Ben Knight January 10, 2024

One’s the heavy-hitter who has won title after title. The other is a young up-and-comer looking to take the throne. Decentralised finance (DeFi) has evolved from a concept into a billion-dollar industry filled with the potential to revolutionise the way we think about money.

Ethereum and Solana are two of the biggest names jostling to make the scene their own. Each powerful network has its own set of advantages and disadvantages that investors, businesses and developers all must consider before embarking on their unique journeys into the exciting world of DeFi.

What is Ethereum?

Ethereum is a long-standing blockchain renowned for its meteoric rise to sit behind only Bitcoin in terms of market cap. Developed by the talented Russian Vitalik Buterin in 2013, the cryptocurrency’s Mainnet went live in 2015 – ushering in a new era of blockchain technology.

The Ethereum network was a revolutionary blockchain for one key reason: smart contracts. Smart contracts are essentially computer programs that can self-execute based on pre-determined conditions. This removed the necessity for a third party to settle complex transactions – think of how you need to use a bank to send fiat money from one account to another. Thanks to smart contracts, developers can now automate all manner of possibilities when creating applications. Some functions include:

  • Trustless lending and borrowing. Removing the need for a third party vastly reduces costs and gives complete financial control to investors.
  • Non-fungible tokens and digital collectibles can be held on a blockchain with a unique type of smart contracts. These can be used to monetise content, as part of DeFi gaming and much more.
  • Outside of DeFi, smart contracts can be used to streamline real estate contracts, improve supply chain efficiency or simplify identity verification.

And so, DeFi was born.

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What is Solana?

Solana is a smart-contract-enabled blockchain conceived in 2017 and officially launched by the Solana Foundation in March 2020. The network was developed by Anatoly Yakovenko and has quickly evolved into a top-10 crypto by market cap and, by most metrics, the second-biggest DeFi ecosystem.

The Solana network employs a unique consensus mechanism to settle transactions on the chain while maintaining decentralisation. This is known as Proof-of-History (PoH), a variation of the more popular Proof-of-Stake (PoS). Essentially, PoH creates a historical record of all transactions that helps the blockchain maintain chronological order without requiring its validators (stakers) to communicate the exact timestamp of every new block. While this may sound a little technical, the outcome is much simpler – Solana can handle thousands of transactions per second while maintaining extremely low transaction fees.

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Comparing Ethereum & Solana

Ecosystem & activity

The Ethereum ecosystem has been home to a huge number of DeFi players and has a thriving developer community filled with some of the blockchain sphere’s brightest minds. The majority of top DeFi platforms and applications are still hosted by Ethereum – think UniSwap, OpenSea and hundreds of unique blockchain networks like Chainlink (LINK) and Shiba Inu (SHIB). Thanks to the prevalence of excellent projects, Ethereum is consistently the highest-ranking ecosystem in terms of user activity – whether this be trading volume or unique wallet addresses. 

​Figure 1: Ethereum Ecosystem. Source Infinito Wallet. 

On the other hand, Solana’s DeFi community has been steadily gaining ground on Ethereum’s. More and more high-profile developers are turning to the Solana Network to host their grand creations, and there are now hundreds of popular dApps and exchanges available within the ecosystem. Solana’s key players include Raydium, Jupiter Exchange and Audius, and the network is positioning itself as a friend of GameFi, with Star Atlas one of several important titles available on the blockchain.

Nothing speaks more to Solana’s outstanding growth than the “flippening” that occurred in late 2023, when for the first time ever, Solana’s daily transaction volume outpaced Ethereum’s. While the Ethereum blockchain is still the big kid on the block, the gap between the competitors is closing.   

Figure 2: Solana ecosystem. Source Solanians. 


Ethereum is notorious for its poor scalability. The Ethereum scalability is of the major reasons that there’s even a necessity for a blockchain like Solana to exist. While Ethereum can handle more users than legacy chains like Bitcoin, its initial framework wasn’t powerful enough to host the amount of activity its dApps raked in without exorbitant transaction gas fees.

Thanks to Ethereum’s switch to a Proof-of-Stake model, its capacity and efficiency have increased substantially. In terms of numbers, Ethereum’s transactions per second hover around 20-30. That said, its gas costs remain quite high – often a few thousand times more expensive than some competitors.

Solana’s blockchain was designed for scalability, and its numbers blow Ethereum out of the water. Solana boasts a max TPS of 65,000+, which in real-time works out to approximately 3-4,000 TPS. At the bare minimum, Solana can handle 100x more transaction throughput than Ethereum’s blockchain can. On top of this, Solana has extremely low confirmation times (less than half a second), making it extremely powerful for applications that require instant settlement. The final nail in the coffin is Solana’s gas fees, which tend to range around one-thousandth of a cent.

From a purely scalability standpoint, Solana’s blockchain is simply much better than Ethereum’s – although the Ethereum Virtual Machine (EVM) developers have continually put work into improving its inefficiencies.

 Figure 3: Layer 1 network scalability comparison. Source Sol Mates. 

Partnerships & integrations

Ethereum is still the biggest DeFi network in the world – and while Solana is growing in stature, it still lacks the household recognition of Ether. For example, Ethereum is set to be the second cab off the rank in receiving a spot ETF (behind Bitcoin), blending DeFi and TradFi and bringing thousands of new investors to the scene.

Ethereum has also secured several long-standing, big-name partnerships with tech companies like Amazon Web Services, Google, Citigroup and Comcast (Xfinity). This is not to mention the hundreds of blockchains built within Ethereum’s ecosystem that each has a role to play in the growing influence of Web3 in both DeFi and the real world.

Solana lacks the prestige of Ethereum, but is starting to gain traction among major institutional and financial players. Perhaps its biggest collaboration so far is with payment giant Visa, which allows cardholders to settle transactions using Solana-based stablecoins. Of course it’s worth noting that this partnership with Ethereum already exists, as most popular stablecoins are hosted atop the Ether network.

Another massive coup for Solana is its integration with eCommerce goliath Shopify. Solana Pay, a “decentralised, open-source, peer-to-peer payments protocol built on Solana” can be used within the Shopify platform, allowing SOL to be spent at thousands of retail merchants.

Challenges & concerns

Not everything is peachy for Solana and Ethereum – each has a set of unique challenges they must overcome before the blockchains can truly achieve widespread adoption.

Ethereum’s largest issue has already been touched upon in this article: scalability. The incredible growth of Ethereum’s ecosystem has had the unfortunate side effect of significant network congestion, leading to Ethereum gas fees being very expensive and settlement times being slow. To address these problems, Ethereum is constantly in a state of development, but such transitions can introduce new problems of their own which may threaten the security of Ether.   

In contrast, Ethereum’s biggest weakness is Solana’s biggest strength – but Solana has been criticised by some in the community for its poor decentralisation. Ethereum has thousands of independent node validators across the world, contributing to the platform’s security and decentralisation. Solana’s consensus mechanism allows for faster and more efficient settlement, but utilises much fewer validators, making it more centralised. The risk factors of increased centralisation include market manipulation from big holders (whales) and greater vulnerability to attacks.


Ethereum and Solana are two of the biggest cryptocurrency projects in the world, each poised to play a part in revolutionising decentralised finance. The competition between the two blockchains is healthy, as both networks continue evolving to meet the new standards of scalability, efficiency and security. Ethereum is renowned for its impressive list of decentralised applications and long-standing history of excellent security. 

On the other hand, Solana has demonstrated vastly superior scalability and cost-effectiveness through its time in the sun.

And so, the question remains: is this battle to the death? Or can the two networks co-exist, providing an interoperable portal to the exciting world of DeFi?

Learn how to buy Ethereum in Australia

Ben Knight

Ben Knight

Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.