The Ethereum (CRYPTO: ETH) price is firming on Wednesday after a potential ‘Ethereum-killer’ cryptocurrency attempts to restart its network following a prolonged outage.
The Solana network is currently stuck in a frozen state after a high-speed processor ran into a problem. Those in the crypto space have been wary of Solana’s rising prominence as a potential competitor to Ethereum. However, it appears Ethereum investors are more positive on the back of the reports.
At the time of writing, the world’s second-largest cryptocurrency by market capitalisation is trading around A$4,673.45, up 3.33% over the past 24 hours.
Solana hits a wall
For those who may not have heard of Solana before, let’s run through a quick review. Solana operates on blockchain technology to provide decentralised finance (DeFi) solutions. Originally founded in 2017, the project has grown in recent months to be considered by many as a potential Ethereum beater.
Importantly, Solana can facilitate around 351 transactions per second at an extremely low average cost of approximately 0.0025 cents per transaction. Theoretically, the network can handle up to 65,000 transactions per second.
Meanwhile, it is believed that Ethereum can only handle roughly 30 transactions per second. In addition, based on gasnow.org, a slow transaction on the Ethereum network would cost $5.03.
To offer such a dramatically faster network at a low cost, Solana employs a proof-of-history (PoH) model. In short, PoH utilises cryptographic verification of time to both secure its network and improve its speed. (Read more about proof of history here.)
Unfortunately, the network was flooded with 400,000 transactions per second, pushing it beyond its capability. As a result, transactions were unable to be prioritised and the network began to fork. Subsequently, some of the nodes that the network relies on went offline.
The outage led to a swift 16% fall in the Solana (CRYPTO: SOL) price from $234 to a low of $196. Since then, the cryptocurrency has recovered to $212.
In an attempt to reboot from the frozen state, developers have passed on instructions to validators to coordinate a restart of the network. At this stage though, the network remains frozen.
The ramifications of the outage are not yet known. However, with a multibillion-dollar ecosystem of trading, staking, and lending on the line, many will be hoping for minimal impact.
Ethereum price in review
The Ethereum price has struggled with its own hurdles in recent weeks. As the non-fungible-token (NFT) space booms on the Ethereum network, gas prices have soared, exceeding thousands of dollars at times.
This has, unsurprisingly, drawn many critics to the unsustainable nature of such prices. Although, those who are bullish on Ethereum are likely awaiting the rollout of Ethereum 2.0 before making a judgement.
The update is expected to improve the performance and functionality of the blockchain through a new structure. An anticipated outcome of this is substantially lower network fees.