From a technical and data perspective, how does Solana become the "traffic bearer" in the Web3 world?

Produced by｜OKLink Research Institute

Author｜Jason Jiang

After the completion of the Cancun upgrade, aside from a significant reduction in L2 transaction fees, the Ethereum ecosystem did not create any ripples; instead, Solana once again became the focus due to a brief wave of Meme hype. Although the Meme heat in the Solana ecosystem has faded this week, Solana has undoubtedly become the "traffic bearer" in today's Web3 public chain arena, thanks to its unique technical advantages and active community ecosystem.

Relative advantages continue to expand? But the goal is not Ethereum

Unlike the vast majority of other Layer 1 public chains, Solana's goal does not seem to be surpassing Ethereum. Solana's founder, Anatoly Yakovenko, initially envisioned making Solana the "Nasdaq of the blockchain space." ------ Achieving Nasdaq-level trading scale and response speed on a public chain to provide more users with fast and inclusive on-chain financial services. For this reason, Solana emphasized transaction speed and performance from the very beginning of its design, which is one of the most notable features of Solana today.

The Solana white paper claims it can handle 710,000 transactions per second, although this is theoretical. At the time of writing, Solana's TPS has remained stable at around 2000-3000 over the past six hours, which is nearly 300 times lower than the theoretical data. If we consider that Solana's TPS calculation also includes consensus information's "voting transactions" (currently accounting for about 2/3 of Solana's TPS, which is typically not included in TPS calculations for other public chains), the actual TPS for "non-voting transactions" involving Dapp smart contract interactions may only be around 600-900. This is a significant gap from expectations, but it still shows a clear advantage compared to Ethereum and its L2s, especially in handling parallel transactions.

Solana's official website shows that the TPS has remained around 2000-3000 over the past 6 hours.

According to Dune Analytics, the recent non-voting transaction TPS has generally been in the range of 600-900.

Of course, TPS is not an "excellent metric." High TPS can be "disguised": suppose a blockchain produces one block per hour, but each block contains one billion transactions, then theoretically it would have a TPS of 277,000. Such TPS performance looks impressive, but who can accept a transaction taking 30-60 minutes to complete? TPS is important, but it often overlooks the impact of block time on user experience: for users, 0.4 seconds （Solana's average block time） and 12 seconds （Ethereum's average block time） make a huge difference. When users experience a delay of more than one second in an application, they may find it unbearable. Especially in today's transaction-driven crypto world, price discovery and transaction execution are closely linked, and every millisecond can be crucial. Therefore, what Solana offers is not only powerful transaction capabilities but also an efficient trading experience that meets user needs.

In addition to speed, low cost is equally important. Compared to Ethereum's high fees, Solana's transaction fees are very cheap, typically requiring only 0.000005 SOL (a fixed value, currently about $0.001) for a single transfer. This fee is still an order of magnitude lower even when compared to Ethereum L2s after the Cancun upgrade. This difference may not be obvious in low-frequency high-value transaction scenarios, but when high-frequency trading demands exist, the cost difference between $0.001 and $0.01 will be enormous.

OKLink special page: Changes in average daily fees for Ethereum L2 after the Cancun upgrade

History has repeatedly proven that only when the interaction cost between users and products is drastically reduced will technology adoption accelerate. Whether it was the early 2000s when cheap Nokia phones replaced landline connections, or the more affordable smartphones that replaced Nokia and helped us quickly enter the digital age, the premise for accelerated technological penetration is that they become sufficiently efficient and affordable during their development.

The aforementioned advantages of Solana have already shown great potential in various fields. Whether it's the rapid growth of concepts like DeFi, Meme, NFT, and GameFi, or the integration of blockchain technology with various real-world scenarios through DePIN projects, Solana's economic and social activities are becoming diversified.

In the long term, due to its "unusual" technical route and architecture, Solana may also establish an irreplaceable relative advantage in the future.

First, Solana heavily relies on hardware to meet the challenges posed by advancements in software-level protocols, ensuring that its speed and scale will improve with hardware advancements. As Moore's Law gradually becomes less effective and AI technology continues to push breakthroughs in GPU/parallel processing capabilities, the computer hardware industry is surpassing software protocols to become the new hotspot. Solana is expected to ride the wave of hardware development, further widening the performance gap with other Layer 1 public chains that rely on software protocol advancements.

Additionally, Solana's insistence on a monolithic architecture may also bring about different changes. This choice is undoubtedly a counterintuitive bet that does not align with mainstream public chain development thinking today. Most, including Ethereum, view monolithic architecture as an obstacle to long-term scalability and attempt to solve the issues arising from it through modular expansion, Layer 2 expansion, and various forms of sharding exploration. However, considering that future on-chain applications will become increasingly complex and intertwined, the development complexity built on modular/layered/sharded systems may increase exponentially, making it increasingly difficult for users to interact across different systems. In contrast, the coordination complexity of a monolithic structure is lower, aggregation latency is lower, and the attack surface is relatively smaller, allowing Solana to potentially provide a more extreme user experience through its monolithic architecture.

Of course, all of this is uncertain. The only certainty is that Solana is rapidly rising and becoming the "traffic bearer" in the current Web3 world.

Becoming the "Traffic Bearer" of the Web3 World

From a transaction perspective, Solana's daily transaction volume has maintained strong momentum over the past month. Unlike the dramatic fluctuations in ETH transaction volume, Solana's token trading volume increased by over 775.91% in a single month, and last weekend it even surpassed $10 billion due to the Meme hype. Although there is still a certain gap between ETH and SOL in terms of token trading volume, the distance between the two is clearly narrowing.

Source: Token Terminal

Compared to transaction volume, token turnover rate (the frequency of token buying and selling within a certain period) better reflects changes in market liquidity. Over the past year, SOL's token turnover rate has consistently been higher than ETH's, and there has been a trend of further widening the gap recently. An excessively high turnover rate does not necessarily indicate high token value (it only proves trading value), but a very low turnover rate certainly indicates a lack of liquidity.

Source: Token Terminal

In terms of active users, the daily active users on the Solana network have been growing rapidly since March, breaking through 1 million and 2 million on March 16 and 17, respectively, setting new records for daily active user numbers in the crypto world. These figures may exaggerate the actual user count, as many individuals control multiple addresses and it's difficult to distinguish them. However, the monthly growth of 379.8% and annual growth rate of 1816.6% for Solana's active user count is still impressive.

Source: Token Terminal

Source: OKG Research

More importantly, whether in Web2 or Web3, the number of developers is one of the most valuable metrics. Steve Ballmer once said: "The key to .net's success is developers, developers, developers." In 2023, about 2,000 developers (including full-time and part-time developers) are involved in building the Solana ecosystem: this number ranks about 7th among all ecosystems in the crypto world. This ranking was higher before 2023, but many developers left due to the FTX incident and SOL's poor performance. However, considering the recent revival of the Solana ecosystem, more developers may refocus on and enter this ecosystem.

Source: OKG Research, based on crypto ecosystems Github

Conclusion

Although Solana is currently performing impressively and even shows signs of surpassing Ethereum in certain metrics, as mentioned at the beginning, Solana's goal has never been to defeat Ethereum. Leveraging high throughput, low latency, and low-cost transaction performance to help Web3 technology penetrate the traditional Web2 market may align more closely with Solana's original vision.

Moreover, even though the impact of latecomers is strong, the basic landscape of Ethereum leading the way has not changed. In past rounds of competition, the public chain ecosystem has long ceased to be an exclusive zero-sum game; cooperation amid competition is becoming the main theme. Looking at the current public chain landscape, aside from Ethereum, other public chains either build on Ethereum to capture application value overflow; focus on vertical ecosystems to attract mainstream participants; or leverage pioneering technological advantages to attract the migration of Ethereum users and traffic.

Regardless of which path is chosen, there are immense growth opportunities. Because in the future, we may enter a highly cross-chain integrated Web3 world, where the value barriers between chains will gradually disappear. Even Solana and Ethereum may achieve complete value free flow in certain scenarios, benefiting each other in the process.