Ethereum and Solana are the two biggest networks preferred by artists for minting non-fungible tokens. But which network is more suitable for you?
The article will analyze the strengths, weaknesses, capabilities, and overall differences of each blockchain so that users can make better decisions that align with their goals in the NFT market.
Ethereum: Ecosystem, Market and Security
There is no question that Ethereum is the largest ecosystem of the DeFi sector, with thousands of projects of all kinds built on it. So the majority of NFTs are working on this blockchain, in the form of ERC-721 tokens.
According to statistics, about 95% of the NFT ecosystem uses Ethereum. Therefore, it is no coincidence that when investors look for the NFT market, the first market they often turn to is OpenSea, Rarible, Nifty Gateway, etc.
In terms of scale, Ethereum leads with a much larger number of buyers and sellers or in other words, a much larger volume of transactions. So, if you mint NFT in an Ethereum-based marketplace like OpenSea, you get more reach and people are willing to buy or bid on your NFT.
The properties of Ethereum make it one of the top ecosystems to launch DeFi projects. Data architecture and security components are why so many developers are building on this largest blockchain platform.
However, as network activity grows exponentially (which happens often), the network will experience a large backlog of transactions, resulting in a spike in transaction fees. This may affect the number of users who can afford to mint NFT.
As a result, NFT creators and collectors are forced to look for alternative blockchains with higher throughput, scalability, and lower gas fees. In it, Solana is a heavyweight competitor of Ethereum. Solana is a high performance blockchain that leverages different cryptographic mechanisms to scale the network.
While escalating gas fees sometimes cause a crippling experience, more money will flow into Ethereum, hence a higher ceiling. Data from CryptoSlam shows that Ethereum has a massive sell volume of over $1.8 billion in the past 30 days, compared with $120 million from markets on Solana.
According to current data from CryptoSlam, we can see the most popular NFT collectibles on the market operating on the Ethereum blockchain: Including CryptoPunks, Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC) …
Other data shows that the average NFT selling price on Ethereum (as of Q4/2021) is around $3,000 compared to Solana’s $1,000.
Solana: High throughput, low fees, growing ecosystem
In terms of technology, functionality and versatility, Solana leads here.
Solana is a high-performance blockchain that uses a Proof-of-History consensus mechanism that leverages a suite of protocols to execute transactions with high throughput — over 60,000 transactions per second (TPS).
In Solana, transaction costs are usually less than $1. Many NFT projects and collectors are turning to Solana to benefit from scalability and cheap transaction fees. They have more freedom to build their projects without technical limitations, one reason why Solana is becoming a hub for NFTs.
Mining NFT at a marketplace on Solana like Solsea is cheap, quick and easy to profit once the asset is put on the secondary market. Typically, NFTs minted on Solana are sold quickly, and royalties on Solana markets are often higher than those on Ethereum markets.
While Solana’s ecosystem isn’t as big as Ethereum’s, that doesn’t mean it isn’t growing. In fact, Solana’s user base grew at a much faster rate since the beginning of 2022, and even analysts from investment bank JP Morgan claim it could surpass Ethereum in the long run.
The NFT market in Solana gained a lot of momentum throughout the third quarter of 2021 according to data from CryptoSlam. By the end of January, sales in the ecosystem surpassed the $1 billion mark.
One of the most popular collections on the Solana blockchain is the Degenerate Ape Academy featuring 10,000 unique NFT Ape.
While they may look similar to Bored Apes from Ethereum, there are distinct characteristics.
The prices for these NFTs are quite high – the highest Degen Ape sale was $1.1 million in September 2021. However, in mid-December, an NFT from the Solana Monkey Business collection sold for over 13,000 SOL, or about $2 million.
Growing ecosystems are often a great opportunity for early adopters to top the list at a time when the network reaches a wider audience. One of their problems, however, is that the risk is often higher. Since the beginning of 2022, the Solana network has been down a few times, forcing users to liquidate positions because it was unable to add collateral during the downtime.
Another concern that has been recently pointed out by developers is the increased carpet pulling on Solana. This is often a problem with emerging technologies, as scammers will try to find and take advantage of any weaknesses they can find. However, carpet pulling and scams happen for many reasons, so it’s not just about security issues, but make sure you do your research before investing in NFT or any other venture. Which DeFi project? Statistically, carpet pulling is the most common scam in the DeFi ecosystem.
Each blockchain has its own pros and cons, so it’s up to you what you want to do with each blockchain to make the right decision. If you are looking for a scalable high-throughput blockchain and low gas fees, Solana will be a better fit.
- The network is less secure.
- Smaller market exposure.
- Outages happen more often.
- If you want greater market exposure and benefit from the security aspects, you can choose Ethereum.
- Access to a larger market.
- High network security.
- NFTs are sold at a much higher average price.
- Network congestion can cause transactions to be delayed.
- Lower throughput and scalability.
- The transaction fee is too high for a part of users who want to mint NFT.