In Defense of Ethereum and the Future of Blockchains
In Defense of Ethereum and the Future of Blockchains
"Ethereum is dead—Solana is the future." For those closely following the blockchain industry, this refrain has become increasingly common across Twitter, podcasts, and crypto discourse when discussing smart-contract blockchains. Critics argue that Ethereum is too slow, too costly, and ill-suited for onboarding the billions of users needed to make blockchain and crypto universally valuable. In contrast, Solana boasts lightning-fast speeds and near-zero transaction costs, making it the preferred network for many high-volume applications.
At Blockchain Coinvestors, our mission is to support and invest in the foundational infrastructure and innovation driving the global blockchain ecosystem. Ethereum, as the leading smart contract platform, continues to play a pivotal role in this landscape. Its unparalleled security, decentralization, and institutional adoption make it indispensable to the future of decentralized finance and programmable digital economies.
Yet, the market sentiment has reflected growing enthusiasm for Solana. While Bitcoin has reached all-time highs and Solana has staged an impressive recovery from its lows, Ethereum's price has lagged behind in comparison. Perhaps the most emblematic sign of Solana's rise is the explosion of the $TRUMP memecoin, which launched ahead of the US President Inauguration on Solana and quickly became one of the most traded assets in blockchain history, generating millions in fees for the network.
For many institutional investors, this Ethereum-versus-Solana debate may seem overly technical or irrelevant. You are probably thinking: why should I care?
This debate surprisingly raises a fundamental question about the blockchain industry's trajectory and what blockchains are ultimately useful for.
Blockchains are, at their core, trust machines—designed to abstract away financial intermediaries and secure digital transactions. Crucially, we believe that in the long run, most transactions in a digital economy will settle on blockchains, meaning a substantial share of global economic activity will be secured by these networks.
It is in the context of this vision that underscores the need for both high-throughput, ultra-performant blockchains like Solana and highly secure, censorship-resistant chains like Ethereum.
Simply put, different use cases will demand different blockchains. It’s no different than operating systems or web browsers. While it has become fashionable to criticize Ethereum, it remains the most secure, credibly neutral network that continues to attract the world’s leading financial institutions.
At Blockchain Coinvestors, we actively invest in both the Solana and Ethereum ecosystems, as well as a range of other smart contract platforms that cater to different segments of the emerging digital economy.
While many blockchains are competing for relevance, the Ethereum vs. Solana debate is particularly insightful—as it encapsulates the fundamental design tradeoffs shaping the future of blockchain infrastructure. By examining their differences, we can better understand the broader implications for the industry and the evolving role of blockchain technology in global finance and beyond. Let’s dive in.
Ethereum vs. Solana: Key Differences
Ethereum and Solana are both leading blockchain networks but differ significantly in their technical architectures. Ethereum, originally a Proof-of-Work (PoW) network, transitioned to Proof-of-Stake (PoS) with the Merge in 2022 and intends to rely on Layer 2 (L2) solutions like Arbitrum, ZK Sync, Base, and Optimism to enhance scalability. On the ‘base chain’ Ethereum's transaction speed averages around 280 transactions per second (TPS), with fees ranging from $3 to $10. Solana, in contrast, uses a unique Proof-of-History (PoH) consensus mechanism combined with PoS, enabling a significantly higher throughput—achieving up to 1,504 TPS in 2024. With transaction fees as low as $0.00025, Solana has positioned itself as a cost-efficient alternative, making it more attractive for high-frequency transactions and retail adoption.
Source: zenledger
Over the past 12 months, Solana has experienced exceptional ecosystem growth, solidifying its position as a formidable competitor to Ethereum. One of the most closely watched metrics in blockchain analysis is Real Economic Value (REV)—often considered the most reliable indicator of genuine network demand. By this measure, Solana has recently surpassed Ethereum, signaling a shift in user activity and transaction-driven value creation.
Source: Blockworks
Additionally, Solana’s decentralized exchange (DEX) trading volume peaked at $9.56B daily in February 2025, outpacing Ethereum’s $8.48B.
Despite Solana's rapid growth, Ethereum remains the clear leader in Total Value Locked (TVL), with $60 billion as of February 2025—bolstered by institutional trust and a deeply established DeFi ecosystem. While Solana’s TVL surged 255% in 2024, it still trails significantly at $9 billion. Furthermore, Ethereum’s Layer 2 networks collectively hold $40+ billion in TVL, with Arbitrum ($13B) and Base ($12B) leading the pack. This underscores Ethereum’s continued dominance in capital allocation and value security across its ecosystem.
Both networks continue to attract institutional and corporate adoption but with distinct focuses. Ethereum remains the preferred choice for major financial institutions, leveraging its Layer 2 solutions for scalability. It also benefits from regulatory clarity, with SEC-approved ETFs and tokenization initiatives led by firms like Securitize and Blackrock. Solana, on the other hand, has gained traction in high-frequency trading and DeFi, with Franklin Templeton tokenizing funds and projects like Raydium and Orca optimizing decentralized finance infrastructure.
To generalize, Ethereum continues to attract usage for ‘high value’ transactions where you want to have a high level of security and are not overly concerned with a high transaction cost. Whilst Solana is gaining with users who want high throughput and to conduct millions of transactions, where low (near zero) fees are critical.
Comparing and Contrasting the Advantages
Solana and Ethereum are prominent blockchain platforms, each with distinct advantages and challenges that cater to different use cases and user preferences.
Pros of Solana:
High Throughput and Low Fees: Solana's unique combination of Proof-of-History (PoH) and Proof-of-Stake (PoS) consensus mechanisms enables it to process over 4,000 transactions per second (TPS), significantly surpassing Ethereum's 15–30 TPS. This high throughput results in minimal transaction fees, often less than a cent, making Solana ideal for applications requiring rapid and cost-effective transactions.
Enhanced User Experience and Onboarding: The network's speed and low costs contribute to a smoother user experience, particularly for decentralized applications (dApps) and non-fungible token (NFT) platforms. Users can interact with the network without concern for high fees or delays, facilitating easier onboarding for newcomers to the blockchain space.
Cons of Solana:
Centralization Concerns: Solana's network, while efficient, has faced criticism over centralization risks due to its relatively limited number of validators compared to Ethereum. This concentration could potentially compromise the network's decentralization ethos.
Network Stability Issues: The platform has experienced instances of downtime and network outages, raising concerns about its reliability for critical applications. These disruptions highlight the need for ongoing improvements in network robustness. While Solana has improved, its most recent network outage was in February 2024.
Emerging Competition: The blockchain landscape is witnessing the emergence of several high-throughput platforms aiming to address scalability and efficiency, posing competitive challenges to Solana's market position. This includes several layer 2 chains on Ethereum, like Base, which now has transactions costs below $0.0001.
Pros of Ethereum:
Robust Security: Ethereum's long-standing presence and extensive testing have established it as a highly secure platform, making it a preferred choice for applications where security is paramount.
Institutional Adoption: Leading financial institutions, including BlackRock and Deutsche Bank, have shown interest in Ethereum, leveraging its mature ecosystem for various applications. This institutional backing underscores Ethereum's credibility and trustworthiness in the financial sector.
Uninterrupted Operation: Ethereum boasts a track record of continuous uptime, ensuring that applications running on its network remain consistently available without unexpected interruptions. It has not had a network outage since it started, in July of 2015.
Decentralization and Neutrality: With a vast number of validators and nodes distributed globally, Ethereum maintains a high degree of decentralization, aligning with the core principles of blockchain technology and ensuring resistance to censorship.
Cons of Ethereum:
Scalability Limitations: Despite ongoing upgrades, Ethereum continues to face challenges in scaling effectively, leading to slower transaction speeds and higher fees during periods of network congestion.
Higher Transaction Costs: The network's limited throughput often results in elevated transaction fees, which can be prohibitive for users engaging in smaller or more frequent transactions.
In summary, while Solana offers impressive speed and cost advantages suitable for applications requiring high transaction volumes, it faces challenges related to centralization and network reliability. Ethereum, conversely, provides a secure and decentralized platform with strong institutional support but contends with scalability and cost issues. The choice between the two platforms depends on specific project requirements, including considerations of security, cost, speed, and decentralization.
The View from London
I’ve written before—and will emphasize again today—that we are in the midst of rebuilding the financial system. A system that is more secure, more efficient, more inclusive, and ultimately more decentralized. Blockchains are the foundation of this transformation, enabling a trustless, programmable financial infrastructure with the potential to reshape global markets.
In this vision, both high-performance blockchains like Solana and high-security, credibly neutral chains like Ethereum have critical roles to play. This is why we do not believe Ethereum is dead. The facts speak for themselves—BlackRock, Deutsche Bank, Sony, Coinbase, Kraken, and other leading institutions continue to build on Ethereum and its layer 2 chains, reaffirming its role as the most trusted and secure blockchain infrastructure.
Both Ethereum and Solana have distinct competitive advantages and challenges. Ethereum, with its “Lindy” effect and 15-year track record, has built a deeply entrenched reputation and continues to secure nearly 10x the value of Solana. However, its progress has been deliberately cautious, and while its Layer 2 ecosystem provides scalability, it remains fragmented, making the overall user experience less seamless.
Solana, by contrast, moves fast, ships quickly, and is rapidly onboarding retail users with a streamlined and efficient product. However, concerns about centralization and network reliability may limit its appeal to larger institutional players. Moreover, Solana faces increasing competition—not just from new high-throughput blockchains but also from Ethereum’s evolving Layer 2 ecosystem, which is rapidly improving and may soon match Solana’s speed and efficiency while maintaining Ethereum’s security and decentralization.
Ultimately, we believe that the digital asset market will grow to become one of the largest asset classes in the world. Just as multiple operating systems, web browsers, and gaming consoles coexist to serve different needs, Ethereum and Solana will both play essential roles in the evolving blockchain-powered economy.
As the blockchain ecosystem evolves, Ethereum's resilience and credibility remain central to our portfolio strategy, offering investors exposure to the most trusted and widely adopted blockchain infrastructure. Whether through its DeFi dominance, institutional partnerships, or the emergence of its Layer 2 solutions, Ethereum continues to unlock new possibilities for value creation. We invite you to explore how these trends align with Blockchain Coinvestors’ focus on driving growth and innovation in the digital economy.
Reach out to us to discuss our unique approach to investing in the blockchain ecosystem and to the networks shaping the future of global finance.
Thank you for reading.
Mitch Mechigian
Partner, London
About Blockchain Coinvestors
Blockchain Coinvestors invests in blockchain businesses. Our vision is that digital monies, commodities, and assets are inevitable and all of the world’s financial infrastructure must be upgraded. Our mission is to provide broad coverage of early stage blockchain investments and access to emerging blockchain unicorns. Blockchain Coinvestors’ investment strategies are now in their 12th year and to date we have invested in a combined portfolio of 1,250 blockchain companies and projects including more than 110 blockchain unicorns. Visit us at www.BlockchainCoinvestors.com to learn more.
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