Solana founder Anatoly Yakovenko, commonly known as “Toly,” shared his views on the key challenges related to the interaction between blockchain hardware and software.
In a recent post on X, he pointed out that the core difference between Solana’s approach and Ethereum’s is in how they handle congestion. From Solana’s perspective, relying on price discovery (i.e. raising transaction fees) is not an effective solution when the world’s resources are saturated.
Yakovenko emphasized the need to scale hardware to meet increased demand, rather than relying on fare increases to manage congestion.
If the software does not allow the validator to increase its hardware capacity to handle additional network traffic, Yakovenko believes it indicates a flaw in the software design.
I think the fundamental difference between solana’s vision and Ethereum’s vision is that price discovery doesn’t work in solana when global resources are saturated.
Although this is a good way to handle congestion, it essentially requires the hardware to scale up to meet new demands. if…
— Tori🇺🇸 (@aeyakovenko) October 18, 2024
He further explained that only local competition, or competition for resources that cannot be scaled up, should lead to increased user fees. This, not global congestion, should be the only reason for the rate adjustment.
Yakovenko also discussed the limits of hardware scaling, suggesting that the maximum amount of bandwidth that can be added is approximately 1,000 times the cost of the hardware, with a scaling constant “K” of 10 or less.
This highlights Solana’s focus on leveraging hardware improvements to manage network growth.
SOL/ETH conflict
Ethereum’s recent price hike due to market factors and increased interest has caused the SOL/ETH pair to fall, indicating Solana’s relative underperformance compared to Ethereum.
However, according to CryptoQuant CEO Ki Young Ju, Ethereum’s market capitalization is gradually being taken over by Solana.
Source: Ki Young Joo/X
Solana has experienced strong growth over the past year, but Ethereum’s growing dominance has overshadowed competing layer 1 chains like Solana.
Solana’s USD price is likely to remain stable as ETH attracts more funds. That said, its value relative to Ethereum has declined, highlighting the challenge of maintaining momentum against major blockchains.
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A report published by VanEck on September 25 predicts that Solana could soar to $330 and reach 50% of Ethereum’s current market cap.
The report highlights Solana’s superior speed and efficiency as key drivers of this growth. For example, Solana’s transaction processing speed, measured in transactions per second (TPS), is 3,000% faster than Ethereum.
Additionally, Solana boasts 1,300% more daily active users and nearly 5 million percent lower transaction fees than Ethereum, highlighting its competitive advantage.
SOL bullish indicator
Currently, SOL is trading at $153.84 and is struggling to break out of the $155 resistance level.
Source: CoinMarketCap
According to data from CoinGlass, Solana’s trading volume surged 24.88% on Friday to reach a staggering $4.76 billion. This increase in activity indicates growing confidence and interest in SOL, which could have a positive impact on SOL’s price.
Source: Coinglass
Solana’s bullish sentiment is further reinforced by its current long-short ratio of 0.9685 on 4-hourly, indicating traders are largely optimistic about its near-term performance.
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However, at the time of writing, SOL’s open interest (OI) has shown a decline of only 1%, currently sitting at $2.42 billion, still supporting investor confidence.
Despite recent weakness, Solana’s strong ecosystem and adoption prospects, particularly the expected mainnet launch of Firedancer with Jump Crypto in early 2025, highlight its long-term potential. I am.
