Well, not really. But I do realize it's quite a gory title. It is what it is. Solana blockchain halted itself for the eighth time in the past 3 months. It has become a sort of a routine now. Something you don't pay much attention to. However, when bearish sentiments are at its peak, nothing is spared. As a result, Solana has slipped from an ATH of $140 to a measly $35 in the last three months.
But why are so hell bent on killing Ethereum? Also, why is Solana considered to be a candidate? And why has it got some serious ground to cover? Let's explore all of this.
If you have ventured into the DeFi world for a while, you would know this already. For the uninitiated, Ethereum is one expensive Blockchain. It may not matter much for bigger players out there. But if you are someone looking to invest a couple of hundred dollars in some protocol on Ethereum: Do not. Because the gas fee would almost be equal to your total investment.
Apart from that, Ethereum is slow. It can process up to 12-15 transactions per second. Of course there are plans to fix it with ETH2.0. But for now, it is what it is.
So any sane individual would obviously look for alternatives. And currently, they are spoilt for choices. Every new L1 that pops up calls themselves as Ethereum killers.
And the biggest contender of them all is Solana.
Founded in 2017 by Anatoly Yakovenko, Solana was designed to solve the high costs and slow transaction speeds that limit the scalability of other blockchains, such as Ethereum. Solana can process a staggering number of transactions per second (TPS) of 3,000. For some perspective, Visa can only do 1700.
Solana has grown tremendously over the last year. The token price went skyrocketing to $140 in no time. However, Solana has now faced regular outages which has made people believe that it is centralized in nature. Here are a few reasons that this might be true:
The holding patterns of $SOL (native token of Solana) is rather odd. Our intention with web3 has always been the democratization of wealth. However, founders of Solana may not feel the same way.
As per the Messari report published last year in May, about 50% of the tokens are held by VCs and Solana foundation (company owned by the founder himself).
When compared with the likes of Ethereum, it is fair enough to say that Solana is a privately owned Blockchain.
A good measure of understanding the decentralization of a protocol is to find out how many nodes are actually contributing to validation of the transactions. For Solana, this number stands at 1447.
Compare that with BTC which has 16000+ nodes and Ethereum which has ~2500 nodes. Usually, when a participant validates the transactions incorrectly leading to problems on the network, the node is often penalized. This is known as slashing.
Solana does not have that slashing mechanism implemented.
Well, that is a tricky question. But to give you some perspective, it is evident that Solana has compromised with the decentralization in order to give way to speed and security. These random outages have created a very bad reputation for Solana. Even more than 'Centralization' narrative ever could.
Given the backing and the team, I am quite sure that it will be resolved sooner than later. Post that, it is a question that you have to ask yourself. Is centralization not a key evaluation metric for you? If not, Solana could be a good bet. If yes, keep distance!