Avalanche and Solana are two smart contract-enabled blockchain networks that share a very similar market fit. Both have been designed to provide faster and cheaper smart contract execution environments than Ethereum. Yet, there are some differences that might make either AVAX or SOL a better investment, and this AVAX vs SOL article will explore them.
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What Do We Know About Avalanche?
Avalanche is a delegated proof-of-stake blockchain launched in 2020 by crypto startup Ava Labs. The network was created to provide faster and cheaper transactions than Ethereum.
AVAX is Avalanche’s native crypto asset. It has utility in the network’s consensus mechanism and as a medium to pay transaction fees.
The asset has a hard supply cap of 720 million, which is periodically unlocked and distributed to validators via rewards. AVAX holders govern how quickly supply inflates to this maximum. Unlike other networks with transaction fee burn mechanisms, the entire transaction fee is burned on Avalanche.
At around 4,500 Avalanche has a much higher transaction per second count than Ethereum’s seven. The blockchain can also confirm transactions in less than a second.
Avalanche’s utility has given rise to vibrant DeFi and NFT sectors. In terms of DeFi, the network’s biggest applications by total value locked are lending platform AAVE, liquidity market protocol Benqi and decentralized exchange Trader Joe. The latter platform facilitates crypto-to-crypto trades of Avalanche-supported assets — you can’t swap BTC to XMR there, for example. Meanwhile, Avalanche’s biggest NFT marketplaces by trading volume are Joepegs, Element Market, and NFTrade.
Solana Overview
Like Avalanche, Solana is a high-performance smart contract-enabled blockchain network. To achieve its reported 65,000 transactions per second, the network implements a novel consensus mechanism called proof-of-history, which enables it to track when events took place, leading to greater efficiency. Solana combines proof-of-history with a delegated proof-of-stake system to incentivize participants to run the network’s hardware.
SOL is the Solana network’s native crypto asset. Solana users must pay transaction fees using SOL and the currency is staked by validators who receive rewards in newly minted SOL for supporting the network. The asset also has utility in network governance.
SOL does not have a maximum supply; It has a periodically reducing inflation rate. Starting at 8% inflation, issuance reduces by 15% annually until it reaches its long-term inflation rate of 1.5%. The network also burns part of every transaction fee, mitigating the impact of inflation on SOL price.
Thanks to its extremely fast — 400 milliseconds — transaction confirmation time and consistently low fee structure, Solana has attracted considerable economic activity. Magic Eden, the network’s largest NFT marketplace, has a monthly volume routinely in the tens of millions, and Solana’s DeFi sector hit total value-locked highs of more than $10 billion in 2021.
Solana smart contracts — or “programs,” as they’re known — are written in general-purpose programming languages like Rust, C, and C++. This, along with an abundance of third-party SDKs available, make Solana an extremely developer-friendly ecosystem.
SOL vs AVAX Comparison
| SOL | AVAX | |
| Marketcap Blockchain TPS Average Transaction Fees Programming Language | $5.2 billion Solana Up to 65,000 <$0.01 Rust, C, C++ | $3.87 billion Avalanche Up to 4,500 <$0.01 Solidity |
What Is a Better Investment Option?
Both Avalanche and Solana have similar market fit as a more affordable, faster alternative to Ethereum. Integral to the systems on which they operate, the value of their native assets, AVAX and SOL, ultimately depends on their underlying networks’ adoption.
While both ecosystems have seen adoption in terms of DeFi, NFTs, on-chain gaming, and other niches, they face big competition from Ethereum and other smart contract-enabled platforms. Additionally, insiders account for a large percentage of initial asset distributions. These are tokens that early investors will intend to eventually sell, contributing to downward pressure on price.
With similar allocations and market fit, adoption really is the key asset value driver. Network metrics suggest Solana is ahead here. If such adoption trends continue, and barring any black swan events, SOL should continue to outperform AVAX.
See Also…
All You Need To Know To Create Your Own Cryptocurrency For Free(Opens in a new browser tab)
