Solana overtakes Ethereum in daily transactions: Can SOL price overcome network concerns?

Solana (SOL) has demonstrated its strength as a possible Ethereum killer once again.

In the second quarter of this year, the Solana blockchain achieved 40 million daily transactions, overtaking Ethereum’s roughly one million transactions, according to a recent report by blockchain analytics platform Nansen. 

But while the fast and cheap blockchain has been drawing in users, investors are proving less eager to jump on the native SOL cryptocurrency.

SOL to USD

The SOL price struggled this year as the blockchain has grappled with various on-chain problems.

Network outages fuel concerns

Solana has faced 12 network outages this year alone. The most recent was on 1 June 2022 with the network down for four hours and 10 minutes. SOL’s price did not fare well. It saw a price drop of over 12%.

There is not one root cause for the many outages this year, according to the Nansen report. The two disruptions in April and May were down “stalled consensus”, while June’s interruption was due to “due to a runtime bug that allowed a failed transaction to be processed twice”.

This has led to SOL’s price being worse off than some of its rivals. While solana is down around 15% over the past seven days, cardano (ADA) is only down around 10% and XRP is up 7%, as of 20 September.

Top performers on the Solana network

Although most of Solana’s transactions in the second quarter involved unknown entities, there were clear favourites according to Nansen when it came to protocols.

The decentralised exchanges (DEXs) Mango Markets and Serum were the top two Solana applications. Both had more than 150 million total transactions during the quarter.

Derivative trading protocol, 01 Protocol, had also shown growth earlier this year, despite being a relatively new addition to the Solana ecosystem. It had almost 50 million total transactions, ranking it fourth out of all protocols.

Can Solana compete with Ethereum?

The rise of more scalable blockchains has been noted by Ethereum and fuelled its decision to merge to proof-of-stake (PoS) system. The upgrade, known as The Merge, was completed on 15 September, paving the way for faster and less energy intensive transactions.

Ethereum’s blockchain may be more scalable, but its ETH cryptocurrency has not lived up to the hype. At the time of writing, it was trading down around 20% over the past seven days.

Meanwhile, Nansen makes a compelling case for Solana’s future in its report. It said: 

“The upcoming events that welcome new builders to the Solana ecosystem also point towards a thriving and supportive community that is focused on building up the space and onboarding the next…