To answer the question: “Avalanche vs Solana, which is better?” we must first understand the difference between these two projects. In this article will examine their smart contracts, staking rewards, and price performance.
Avalanche vs Solana
So, which is better? Avalanche or Solana? The answer depends on your investment goals. Avalanche has the potential to replace Ethereum as the number one smart contract provider, and Solana can displace centralized giants like VISA and MasterCard in the payment system.
Both Avalanche and Solana are based on timestamp proof-of-history and can process thousands of transactions per second. Bitcoin, in comparison, can only process 7 transactions per second.
Both projects aim to solve the blockchain trilemma (decentralization, security and scalability) but each has different features. For example, Avalanche introduces a new type of PoS algorithm known as Snowball. This algorithm uses Directed Acyclic Graph (DAG) data structures to ensure partial ordering of decisions. Avalanche’s speed is also impressive. Avalanche can process up to 4,500 transactions per second.
Smart contract design
There are some significant differences between Solana and Avalanche’s smart contract designs. Solana is a decentralized blockchain while Avalanche is a non-decentralized network. However, both platforms have some common ground. They both aim to be scalable and secure while delivering the same benefits. Here we will compare and contrast the two. We will also discuss the merits of each network, as well as how it can benefit your business.
Solana is more performant than Avalanche, with a theoretical throughput of over 50,000 TPS and over 200 nodes. This is because Solana’s blockchain uses a Proof-of-Work algorithm instead of a Proof-of-Stake network. Solana is faster, with fewer nodes than Avalanche, and it focuses on the DeFi and GameFi ecosystems.
To participate in the staking reward program for the Avalanche, AVAX token holders have to stake the token for a specific period of time. Staking reward duration can vary between two weeks and a year, depending on the amount of circulating supply. If the staking period is longer than the specified time, stakers will earn more rewards than if they staked for a shorter period of time.
Staking rewards for Avalanche are higher than for Solana. For example, SOL tokens earn a 6% annual yield when staked for one year. The return increases as the tokens earn compound interest. In the first year, the 6% yield equals six percent of the total staked. By the second year, the staker will get 6.36 Solana tokens.
To compare the price performance of Avalanche vs. Solana, let’s first examine the performance of their respective ecosystems. Solana and Avalanche have been relatively stable since their launch, but Solana has seen network outages recently along with expensive hacks. With the recent collapse of Terra, investors are more wary of cryptocurrency, and this could potentially disadvantage Solana over AVAX in the short to medium term.
In general, both coins have been rising in recent weeks, but both have also broken below key support levels. Further selling pressure could push these stocks to new yearly lows. Still, it’s worth noting that Solana has been leading the Layer 1 network during the 2021 bull run. After a 44% correction in May 2022, the pair has been locked in a tight trading range.
Final thoughts on Avalanche vs Solana
Solana leads in speed and cheap transactions, while Avalanche is a growing ecosystem with active P2E games. They both started out as DeFi networks and then branched out to other projects, such as the aforementioned gaming apps. The AVAX and SOL tokens began to gain popularity in 2021 as their respective ecosystems grew in size.
While both AVAX and SOL are good long-term investments, AVAX has a better chance of outperforming SOL in the medium term.
Still, Avalanche and Solana both have a high chance of future growth due to the fast-growing nature of their ecosystems and the crypto market in general. Now that their prices are at all-time lows compared to their previous all-time highs, the odds are that when the broader market recovers, these two will perform well. Avalanche, on the other hand, is more likely to outperform Solana in the next bull run.
This has a lot to do with the two networks’ history. Since its inception, Avalanche has been consistently stable. Solana, on the other hand, has recently experienced several network outages and costly hacks that have jeopardized its reputation. Following the recent Terra collapse, many investors are likely to be much more aware of the risks associated with the cryptocurrencies in which they invest. In the short to medium term, this may disadvantage SOL over AVAX.
At the time of this article SOL was trading at $40.57 while AVAX is trading at $26.09. The currencies are available on all major exchanges, including eToro, Binance and Coinbase.
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Jay Speakman is a technology writer based in San Francisco, California. He writes on the topics of blockchain, cryptocurrency, DeFi and other disruptive technologies. Clients include Avalanche, Be[in]Crypto, Trust Machines and several blogs devoted to blockchain gaming. He will not rest until fiat currency is defeated.