While Solana shines today among the crypto leaders, new players are preparing to take over. Who will rise to the challenge to become the next Solana and attract users with cutting-edge innovations and formidable performance?
The phoenix rising from the ashes
SOL, the native cryptocurrency of the Solana blockchain, rose to 4th place among the most capitalized cryptosnarrowly surpassing Binance Smart Chain (BSC) BNB in this same metric.
Yet, its future was more than uncertain at the end of 2022 following the fall of the crypto exchange FTX. Indeed, it was common knowledge that Alameda Research, FTX's investment fund, owned a large sum of SOL.
💡How to buy SOL, Solana’s cryptocurrency?
Despite a fall in SOL to around $8 per unit during this dark period, this ordeal now seems well behind it, with the crypto proudly displaying an increase of 2,200% today.
Solana, the reigning champion of this cycle
Although Solana has fallen on hard times, she was able to benefit from unwavering support from her community who placed high hopes in the proposition of his blockchain.
Beyond the community aspect which contributed to the success of Solana, its technical characteristics have also been beneficial to it, notably with much lower fees than Ethereum, while offering a smoother user experience.
Even if Ethereum supporters criticize the Solana blockchain for its limited level of decentralization, it accepts this compromise by placing more emphasis on the scalability of the network.
Since November 2023, Solana has far outpaced Ethereum in terms of daily active addresses :
Daily active addresses on Solana (blue) and Ethereum (yellow)
Thus, the result is clear: the Solana blockchain is used more than Ethereum. However, it is important to keep in mind thata significant portion of active addresses are potentially linked to bot activitywhich partially distort this result.
🔎 On the same topic – Is Solana poised to overtake Ethereum?
At any rate, the Solana blockchain has stood out for its very strong adoption over the last 2 yearsparticularly with the integration of flagship decentralized applications (DApps) such as Pump.fun.
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A title coveted by many competitors
Although a transaction on the Solana blockchain is particularly cheaper and faster than a transaction on Ethereum, competition is fast approachingready to fight.
Next generation blockchains, with technologies allowing ever greater speed at lower costs are already in the game and coveting Solana's place.
However, the real opportunity for these blockchains lies in reliability rather than raw speed. Solana’s 40% failed transaction ratemainly due to slippage linked to decentralized exchanges (DEX) and bot activity, constitutes a clear vector of differentiation.
For transaction-intensive dApps such as high-frequency trading and Web3 gaming, consistent execution may be more valuable than marginal speed improvements.
Successful (green) and failed (red) transactions on the Solana blockchain
For example, the Sei blockchain was specially designed to optimize a specific sector: trading, and therefore DEXs.
Aptos and Sui, 2 blockchains born from the ashes of Diem, the former blockchain project of the company Meta (Facebook), adopt a structure based on the Move language and the parallelization of transactions.
In addition to the security benefits of using a language like Move, the blockchains named above also offer more scalability than Solana. While Aptos is focusing its efforts on integrating Web2-native companies into its ecosystem, Sui is focusing its strategy on a structure conducive to TradFi and Web3 gaming.
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The advantage of layer 1 compared to modular blockchains
You will probably have noticed it if you have been browsing the crypto ecosystem for a while, but all the blockchains that we have briefly discussed are monolithic blockchains. In other words, only layer 1 blockchains to date, without layer 2 on top.
The most significant advances in these new layer 1s come from their transaction processing speed and their cost structure. Despite the fact that some experts say modular blockchains fundamentally cannot match the speeds of monolithic chainsemerging solutions like Unichain, Arbitrum, Fuel and MegaETH may challenge this assumption.
Regardless, monolithic blockchains retain a crucial advantage: the ability to preserve common state, shared liquidity, and a unified user experience – advantages which remain fragmented with modular blockchains.
⚛️ Understand everything about modular blockchains with our dedicated article
However, even blockchains attached to their monolithic structure like Solana, ultimately choose to integrate L2s for various reasons, including scalability limits during periods of high interest.
As we can see in the graph above, periods of congestion on the Solana blockchain have resulted in average transaction fees of up to $0.13.
Evolution of the average transaction fees on Solana
This is why initiatives such as SOON aim to offer a calculation offset solution on Solana, like an optimistic rollup. Although this solution is very close technically and fundamentally to a traditional layer 2, Solana Foudation prefers to describe the latter as Network Extension.
Indeed, while a traditional layer 2, like those present on Ethereum, “ would vampirize » its layer 1, the Network Extension would be beneficial in every way for the parent blockchain according to Solana supporters.
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Sui, the most legitimate candidate to claim the title
Although many projects aim to compete with Solana, Sui appears to be the most credible candidate yet.
The Sui project currently benefits from particular visibility since the eponymous token is in price discovery and its market capitalization has never been so important.
Market capitalization of the SUI token
Sui is also one of the 3 blockchains having recorded the largest net flows over the last 3 months, proof of real interest:
Net flows of $465 million (sum of inflows – outflows) of capital on the Sui blockchain
Founded in 2023 by Diem's former team, Sui has become a leading challenger to Solana. While Mysten Labs CEO Evan Cheng positions Sui as a general-purpose blockchain, its architecture reveals a natural advantage in Web3 games and social applicationsdriven by 3 key assets: optimal user experience, powerful game primitives and TradFi-compatible infrastructure.
In a few words, Sui allows account abstraction, a real key element to facilitate the onboarding of a critical mass of users. Additionally, Sui also allows transactions without gas fees. So many advantages, coupled with strong scalability which make it a blockchain of choice for Web3 games.
To make the most of its natural abilities, Sui is expected to launch a portable gaming console sometime in 2025.
Sui adoption areas
Beyond Web3 games, Sui targets institutional adoption through 2 key offerings, Closed Loop Token And Deepbook.
The first is a standard to facilitate the creation of permissioned tokens, facilitating the integration of institutions through a clearer regulatory path.
The second is a central limit order book, providing decentralized finance (DeFi) capabilities at, once again, institutional standard level.
Sui seems to bring together several assets to shine during this cycle. However, it is essential to note that Sui does not directly compete with Solana when it comes to apps.
On the contrary, it stands out with a unique proposition, based on its intrinsic capabilities. This ecosystem is attracting keen interest from investors attracted by its growth potentialas evidenced by the recent inflows of liquidity to this blockchain.
Although most emerging blockchains have higher capabilities than Solana, “mere technical improvements” will not be enough to dethrone it. In order to successfully find your audience, these new blockchains must also offer specific use caseswhich meet a particular need to stand out.
Could Sui meet this challenge?
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Sources: The Naked Collector, Artemis Terminal
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Passionate about the blockchain ecosystem, I like to deepen my knowledge and share my discoveries. In a perpetual quest to learn more about cryptos, I recently joined the Cryptoast Research team where I provide weekly fundamental analysis.
Théo Zananiri
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