Developments in the Race Between Ethereum and Solana
The race between Ethereum and Solana has changed significantly in recent months, particularly regarding transaction fees. Ethereum Layer-2 solutions have dramatically reduced transaction costs due to significant optimizations, making them cheaper than Solana in some cases.
Ethereum Layer-2: The Role of the Dencun Upgrade
1. Dencun Upgrade: In March 2024, the Dencun Upgrade was implemented, fundamentally changing the cost structure within the Ethereum ecosystem. This upgrade combines the Cancun and Deneb upgrades and represents the most significant improvement since the Shapella upgrade in April 2023.
2. Proto-Danksharding (EIP 4844): A central component of the upgrade is the introduction of Proto-Danksharding through the Ethereum Improvement Proposal (EIP) 4844. This innovation allows transaction data to be stored outside the mainnet, making data transmission between Layer-2 networks and Ethereum more efficient and cost-effective.
3. Cost Reduction: Through these optimizations, transaction fees on Ethereum Layer-2 networks like Arbitrum, Optimism, and Base have been reduced by more than 90%, making them cheaper than Solana in some cases.
Solana: Challenges and Developments
1. Speed and Costs: Solana has long been known for its high speed and low transaction fees. These advantages have made Solana an attractive alternative network, especially for applications requiring high transaction rates.
2. Structural Weaknesses: Despite its advantages, Solana repeatedly shows structural weaknesses as network usage increases. These weaknesses could affect the long-term scalability and reliability of the network.
3. Solaxy and Future Developments: Solaxy aims to reverse the current developments and make Solana a leading network again in terms of transaction costs. Additionally, initial Layer-2 solutions for Solana are in planning, which could further improve the scalability and efficiency of the network.
Impact on Private Investors
The recent developments in the race between Ethereum and Solana are of great importance to private investors. The declining transaction fees on Ethereum Layer-2 could lead to increased usage and attractiveness of the network, which could in turn influence the demand for ETH. However, ETH holders do not directly benefit from the lower fees on Layer-2, as many of these fees are incurred outside the main chain.
In summary, the optimizations in the Ethereum ecosystem, especially through the Dencun Upgrade, have significantly reduced transaction costs and made Ethereum Layer-2 a more cost-effective alternative. Solana, on the other hand, needs to overcome its structural weaknesses and improve its scalability to remain competitive.