The global cryptocurrency market is in the midst of a sell-off — Bitcoin, for instance, has fallen roughly 70% from its November 2021 peak. For long-term, opportunistic investors and newcomers looking to explore crypto, this downturn can be a chance to study emerging platforms that have been overshadowed by major players like Ethereum, the second-largest programmable blockchain.
Two Layer 1 blockchains that have drawn attention as potential alternatives to Ethereum are Solana and Avalanche. While both have smaller market capitalizations than Ethereum, they offer similar smart-contract capabilities with much faster transaction speeds and substantially lower fees. Often labeled “Ethereum killers” by commentators, Solana and Avalanche present interesting options for developers and investors alike. Below we take a closer look at each network, their native tokens, and how to acquire AVAX and SOL.
What is Solana?
Launched in 2017, Solana is an open-source Layer 1 blockchain that supports smart contracts, decentralized applications (dApps) and non-fungible tokens (NFTs). Its goal is to offer the same programmability as Ethereum while improving on transaction throughput and costs, making it an attractive choice for developers building high-volume applications.
Solana uses a hybrid consensus mechanism that combines proof-of-stake (PoS) with an innovation called proof-of-history (PoH), a method for cryptographically verifying the passage of time and ordering of events. This architecture enables significantly higher throughput — Solana can process up to about 3,000 transactions per second in normal conditions, compared with Ethereum’s roughly 15–25 transactions per second. For context, traditional payment networks process far more transactions per second, which is a benchmark that some blockchain projects aim to approach.
The network’s speed and very low fees aim to attract developers and users. Industry advisors point out that Solana’s strengths are in offering fast, inexpensive transactions that promote broad usage and a network effect.
Solana’s native token, SOL, ranked among the top ten cryptocurrencies by market capitalization as of late September 2022, with a market value near $15 billion and around 354 million tokens in circulation. SOL’s price has fluctuated this year, falling from more than $178 early in the year to roughly $31 amid broader market declines.
What is Avalanche?
Avalanche, introduced in 2018 by Ava Labs, is another Layer 1, proof-of-stake blockchain that hosts smart contracts and decentralized applications. It emphasizes rapid finality and low transaction fees, positioning itself as a high-performance platform for builders and users.
Avalanche’s architecture relies on three interoperable chains: the Exchange Chain (X-Chain) for creating and trading digital assets, the Platform Chain (P-Chain) for coordinating validators and creating subnets, and the Contract Chain (C-Chain) for deploying smart contracts. These chains are secured by the Primary Network and together provide flexibility for different use cases.
Thanks to that design, Avalanche can handle a high number of transactions per second — figures cited around 4,500 TPS — and supports many Layer 2 and application projects, including decentralized finance (DeFi) protocols, games, and other dApps. Its lower fees have made it appealing to developers migrating from more expensive networks.
Avalanche’s native token, AVAX, was among the top 20 digital currencies by market capitalization in late September 2022, with a market cap around $4.9 billion and a circulating supply near 296 million tokens. At that time, one AVAX was valued at approximately $16.75.
The platform has been expanding its ecosystem and attracting investment to grow its user base. Avalanche has built a solid DeFi presence with dozens of applications, and more initiatives — including efforts tied to the metaverse — have been announced as part of its next growth phase.
Which is the better “Ethereum killer”?
When comparing potential rivals to Ethereum, developers typically weigh security, speed, cost and the likelihood that a platform will endure. A project’s long-term prospects depend on whether it can attract and retain developers without forcing them to migrate their work from one chain to another.
While Ethereum has a longer track record — launching in 2015 — both Avalanche and Solana have gained traction and drawn developer interest. Each network has its strengths: Avalanche emphasizes modularity and compatibility, while Solana prioritizes raw throughput and ultra-low costs.
Some industry observers favor Solana for its current combination of speed and minimal transaction costs. Average Solana transaction fees have been reported as extremely low (on the order of fractions of a cent), whereas Avalanche and Ethereum transactions typically carry higher costs; at times, average Ethereum fees have been substantially larger. Those cost and speed dynamics help explain why many applications and users gravitate toward faster, cheaper chains.
Both Solana and Avalanche are actively implementing upgrades to improve stability and reduce congestion. For token holders interested in earning rewards, both networks support staking, which allows participants to lock tokens to help secure the network in exchange for incentives.
Video: Is crypto a good investment?
Buying AVAX and SOL with Canadian dollars
If you’re looking to purchase AVAX or SOL, they are available on regulated Canadian exchanges such as CoinSmart. These platforms typically offer a straightforward account setup, support for Canadian dollars, two-factor authentication, and options for offline cold storage for added security. Be sure to review fees, verification timelines and customer support options before signing up.
Some exchanges run promotions for new users. If you plan to use a specific service, verify current offers and terms directly on the provider’s site and exercise standard security precautions when funding and trading digital assets.
Final word…
Cryptocurrency markets are highly volatile, and price swings can be severe. Before investing in SOL, AVAX, or any digital asset, consider your time horizon, risk tolerance and financial situation. Never invest more than you can afford to lose, and research each platform’s technology and ecosystem carefully.
Read more about crypto:
- How does crypto work? A guide to investing in bitcoin, ethereum and more
- Watch: Should you invest in ethereum?
- Trading tools that can raise your crypto game
- How to gain exposure to crypto without buying it
This article is sponsored.
This is a paid post that provides information and may feature a client’s product or service. These posts are written, edited and produced by MoneySense with assigned freelancers.