Is Solana the new King of Layer 1s?

AltcoinIntermediate

2025-06-20

Is the future of blockchain monolithic or modular? That's the core question in the intensifying rivalry between Solana and Ethereum. For years, developers have accepted Ethereum's high fees and slower speeds as the price for unmatched security and decentralization.

That norm is being challenged today by Solana. By prioritizing a high-performance, single-shard design, it offers the speed and scalability needed for mainstream adoption, from DeFi to DePIN.

The battle for Layer 1 supremacy is no longer a one-horse race. Ethereum may still be the foundational platform for smart contracts, but its dominance is facing a serious challenge.

But does it truly have what it takes to become the new king? Let's find out today at Toobit Academy!

What Is a Layer 1 Blockchain?

Before diving deeper, it’s important to understand the basics. Let's have a quick recap on what a Layer 1 blockchain is.

To grasp the significance of the Ethereum vs. Solana debate, we first need to understand the arena: the Layer 1 blockchain.

A Layer 1 is the sovereign, underlying architecture. It's the blockchain itself—the Bitcoin, Ethereum, or Solana networks that are responsible for their own security and for validating every single transaction that happens on-chain. The challenge for any L1 is successfully balancing security, decentralization, and scalability (the "blockchain trilemma").

This scalability challenge led directly to the rise of Layer 2 solutions. Protocols like Optimism and Arbitrum operate on top of a Layer 1, acting as high-speed processing layers.

They handle the bulk of transactions independently to make the entire system faster and cheaper, while still anchoring to the base layer for its robust security.

Okay, now we've established that both Ethereum and Solana are Layer 1s. So what's the difference between them?

What is Solana?

Solana is a high-performance, open-source blockchain platform designed to provide unparalleled speed, scalability, and low-cost transactions.

In what can only be classified in hindsight as ominous foreshadowing, the "Ethereum killer", Solana, was engineered from the ground to solve the challenge of balancing speed, security, and decentralization.

The project was founded in 2017 by Anatoly Yakovenko, a former engineer at Qualcomm. Yakovenko's vision was to create a blockchain that could operate at the speed of a centralized network without sacrificing its core decentralized nature.

Solana’s Core Advantages

What's driving Solana's appeal? It's an architectural philosophy that directly challenges the rest of the market. At its heart is the innovative Proof-of-History (PoH) mechanism, which functions like a cryptographic clock.

It timestamps and orders transactions before they are processed, allowing the network to achieve a level of efficiency that is orders of magnitude beyond many rivals.

When combined with a traditional Proof-of-Stake (PoS) system, this hybrid model gives Solana its signature characteristics:

Blistering speed: Rather than a theoretical peak, Solana consistently handles a real-world throughput of 2,500-4,500 transactions per second (TPS). For comparison, Ethereum's base layer processes around 15-30 transactions per second.
Hyper-affordability: Transaction fees are not just low; they are almost negligible, typically costing less than $0.001.

This combination makes Solana a magnet for developers in high-volume sectors like DeFi, on-chain gaming, and NFT minting, who require a network that feels as responsive and cost-effective as a traditional web application.

Institutional and Developer Interest

Talk of Solana's growth is one thing, but the on-chain evidence is undeniable. The ecosystem is firing on all cylinders, attracting users and developers to projects that are defining their categories.

From the market-leading NFT marketplace Magic Eden to breakout "Move-to-Earn" apps like STEPN, Solana has become the premier destination for applications requiring high speed and massive scale.

As of Q2 this year, the Solana network is consistently handling immense user activity, with reports showing over 15 million unique monthly active wallets. This surge in engagement has solidified its position as a leader in decentralized finance (DeFi), with its Total Value Locked (TVL) climbing to over $7.2 billion by June 2025.

This activity is increasingly drawing institutional capital. A clear sign of this confidence was seen on June 18 this year when Circle minted an additional $250 million of its USDC stablecoin directly on Solana, underscoring the network's growing role as critical infrastructure for stable-value assets.

Furthermore, the prospect of a spot Solana ETF in the U.S. continues to build, with market analysts suggesting a high probability of approval by the end of the year, a move that is anticipated to unlock a new wave of institutional investment.

To navigate this rapidly expanding universe, users need reliable access points. This is where platforms like Toobit play a vital role, offering not just a place to trade SOL, but also providing the essential resources and market insights that empower both new and experienced users to engage with the ecosystem confidently.

Ethereum: Still the One to Beat

Yet despite the apparent technical superiority from Solana, to count Ethereum out is to miss the forest for the trees.

While Solana excels in raw, single-chain throughput, Ethereum leverages its formidable first-mover advantage to function as a global settlement layer, with a vibrant, multi-chain ecosystem built around its secure core.

This leadership is powered by the largest and most experienced developer community in crypto—numbering over 200,000 strong. This human capital is the engine behind its unmatched ecosystem of dApps and financial primitives. Far from being slow to adapt, Ethereum's roadmap is methodically addressing scalability.

We've already seen how the successful implementation of Proto-Danksharding (EIP-4844) in the Dencun upgrade has already proven its "modular" thesis, drastically reducing Layer 2 transaction costs and making the network's aggregate throughput competitive with any rival.

This combination of deep liquidity, a massive developer moat, and a clear, functional scaling path is why Ethereum remains the default platform for high-value applications and the benchmark against which all other smart contract platforms are measured.

Challenges That Solana Face

Solana's impressive speed is not without its strategic trade-offs, primarily concerning reliability and decentralization. While network stability has been strong throughout late 2024 and 2025, the shadow of past outages continues to influence institutional risk assessment.

More fundamentally, critics point to the network's architectural choices. Solana achieves its speed through a small cohort of powerful, expensive-to-run validators (roughly 2,000-2,400). This figure stands in stark contrast to Ethereum's one million-plus validators, a difference of several orders of magnitude.

Solana's approach directly impacts its decentralization metrics, such as its Nakamoto Coefficient, which remains significantly lower than Ethereum's. For context, this disparity is largely due to the demanding and costly hardware required to run a Solana validator, creating a higher barrier to entry and fueling arguments that the network is structurally more centralized.

Furthermore, the performance gap is no longer as clear-cut as it once was. Ethereum is not trying to beat Solana on Layer 1. Instead, its "modular" strategy is proving highly effective. Ethereum's modular roadmap is actively neutralizing Solana's performance edge.

The Pectra upgrade in May 2025 further reduced costs on Layer 2s by 30-40%, allowing platforms like Arbitrum and Base to offer a comparable user experience of high speed and low fees, all while settling to the most decentralized and secure settlement layer in crypto.

The Role of Education in Blockchain Adoption

As blockchain technology barrels toward the mainstream, its greatest barrier is no longer just technical—it's knowledge.

Recent industry studies from 2025 highlight this gap, with over 50% of potential investors citing a "lack of knowledge" as their primary reason for not entering the market. This is precisely where the next phase of adoption will be won or lost.

This is why we've built Toobit Academy not just as a feature, but as a core pillar of our platform. We are committed to bridging this gap by providing a structured library of tutorials, deep-dive articles, and real-time market insights.

Our goal is to demystify the complexities of Layer 1 protocols and the broader crypto landscape, empowering our users to move from speculation to strategic, informed decision-making in a market that demands it.

Final Thoughts

Rather than asking if Solana will dethrone Ethereum, the more pressing question for 2025 is how these two giants will co-exist and compete for the next wave of adoption.

Solana's path forward is clear: continue to leverage its speed to attract high-volume applications and user-facing products. As mentioned earlier, the potential approval of a spot Solana ETF later this year could be a massive catalyst, unlocking a new tier of institutional liquidity.

Simultaneously, Ethereum is executing a different playbook, cementing its role as the secure settlement layer for a multi-trillion dollar digital economy via its thriving Layer 2 ecosystem. The future will likely see capital and users flowing between these two powerhouses depending on their needs—speed and low cost on Solana, or institutional-grade security and deep liquidity on Ethereum.

One thing is certain: as this dynamic unfolds, knowledge is your greatest asset. Toobit Academy will continue to provide cutting-edge insights on these platforms and more, ensuring our community is always equipped to understand and capitalize on the future of finance.