Referred to as Total Value Locked (TVL), this refers to the quantity of crypto assets tied up in decentralized finance (DeFi) protocols on the network.
Though DeFi originated on Ethereum, where nearly $110 billion is locked into protocols such as Aave, Compound, and Uniswap, it has since spread to other networks, the biggest competitor being Binance Smart Chain ($17 billion in TVL).
Solana has made efforts to draw DeFi developers and users to its network. DeFi solutions are facing the problem of low throughput and high fees on blockchains that experienced high demand such as Ethereum. Other than demand, technology such as proof of work (PoW) reduces the efficiency on the leading blockchain.
On top of its proof-of-stake consensus mechanism, Solana has innovated a proof-of-history timing mechanism that synchronizes all operators on the blockchain to a single clock. This solves a key issue that slows down regular PoW and PoS systems, and the need to verify timestamps when validating transactions.
In its H1, 2021 report, Solana indicated that 50,000 transactions per second (TPS) could be completed on the platform. The report also showed the average transaction fee on Solana is $0.00001.
In comparison, transaction fees average between $4 – $40 on Ethereum, and with a throughput of 15 TPS.
This enhanced efficiency makes Solana an attractive option for many developers looking to scale.
The Neon Ethereum Virtual Machine (EVM), a tool that lets dApps on Ethereum move to Solana as easily as they’d move to a layer 2 scaling solution, recently launched as part of efforts to drive more activity on Solana.
SOL’s price has blossomed 70% so far, reaching an all-time high of over $74.