Solana has been under great limelight.
The crypto landscape continues to keep investors on their toes. Price volatility, together with new coins and applications coming online almost every day, makes for very interesting, and profitable, times for those willing to put some effort into understanding all these changes.
Transaction fees between Solana and Ethereum
Transaction fees at Polygon PoS are about $50,000 per day, or $18 million annually. While it distributes these inflationary rewards, it has distributed more than $400M. 95% of the profit is lost. Until the speculative mania hit, Solana collected only *$10K/day, but with the market’s upswing it now collects ~$100K/day, or $36.5M annualized. As a result, Solana is giving out an even greater amount of $ 4B in inflationary rewards, leading to a loss of 99.2%.
Based on my numbers from Token Terminal and Staking Rewards, I should stress that I am being very conservative with these figures – in reality, they look even worse. Furthermore, Ethereum is collecting more fees in a day than all of these networks combined in an entire year!
Number of Transactions:
There is an argument to be made here that – over time, the networks will be able to process more transactions, collect more fees and, eventually, break even. Truthfully, things are much more complicated. Solana achieved one of the lowest possible levels of inflation at the end of the decade, but we’re still seeing a 96% loss. As far as profitability is concerned, things are so skewed that it hardly matters – you have to do more than what’s possible to break even. Based on the current transaction fee, Solana would need to do 154,000 TPS just to break even – an impossible task given current hardware and bandwidth.
But the bigger issue is that those additional transactions aren’t free – they increase bandwidth requirements, state bloat, and in general, system requirements. They would argue further that they have plenty of headroom and could do much more, but as discussed in the technical scalability section, even keeping up with a chain with just a few hundred TPS requires 128 GB RAM. Other arguments include said hardware becoming cheaper – this is also true, but it is not a magical solution. You have to choose between more scale or lower costs, or choose a balance, and zkR will also benefit equally from Moore’s law and Nielsen’s law.
Solana is way more centralised than ethereum and thereby fails to fundamentally be what we all truly desire from cryptocurrency: decentralised.