Skip to content

Terra Luna Vs Solana (Compared)

  • by

This article was written before the Luna Crash.

Terra Luna and Solana are currently two of the most exciting blockchain assets due to their unprecedented value appreciation within a relatively short time.

Despite being blockchain projects, the two have several differences and some similarities.

This guide will compare the two, discuss their relationship, and reveal which one is the better option for you as an investor. But first, let’s start with the introductions.

What is Terra Luna?

Terra Luna is a new kind of decentralized finance blockchain protocol for creating algorithmic stablecoins.

So far, two of these tokens have seen relative success but the protocol has no limit to how many tokens can be minted on it. The two are the USD-based TerraUSD (UST) and South Korean Won-based TerraKRW (KRT).

Other than stablecoins, the Terra network has a native cryptocurrency called LUNA, currently ranking among the ten most valuable digital assets by market capitalization.

LUNA is a governance and staking token that is also instrumental in maintaining the value of the stable coins within the Terra ecosystem.

Also read: Can you mine Luna?

What is Solana (SOL)?

Solana is a smart contract decentralized network launched in March 2020. The idea behind the project is to create a highly scalable blockchain that can host decentralized applications such as Defi (decentralized finance) apps, NFTs, and their marketplaces, or even support digital payments.

The network improves upon its predecessors (i.e., Bitcoin and Ethereum) to offer a much faster and cheaper alternative.

It uses a novel Proof of History (PoH) technology which it implements together with the Proof of Stake (PoS) consensus mechanism to achieve transaction processing speeds of up to 2,500 every second (TPS).

Theoretically, it is capable of processing as many as 1,000,000 TPS.

Like Terra, Solana has a native cryptocurrency dubbed SOL, also tasked with enabling governance of the ecosystem through staking and facilitating value transfer.

Also read: Is Solana eco-friendly?

Terra (LUNA) vs Solana (SOL): Key Takeaways

As defined in the previous section, it is easy to pick out some key differences between the two projects. However, for easier reference, here is a brief rundown of their main differences:

Is Terra Luna Better Than Solana?

There are several factors to consider when deciding whether a blockchain project is better than another. In the case of Terra and Solana, here are some of these factors:

Function

What was each blockchain created to do? Terra is a payments protocol designed to host Defi applications and enable the minting of algorithmic stable coins.

Solana, on the other hand, was created to enable developing and hosting all kinds of decentralized applications (dApps).

Therefore, Solana is a much more capable smart contract platform than Terra but if Defi is all you need, Terra may serve you better than a general platform like Solana.

Also read: Is Terra layer-1?

Speed

How fast does each network process its transactions?

For Terra, theoretically, it can process about 10,000 TPS compared to Solana’s 710,000.

Terra does not release its actual figures in terms of real-time TPS as that number is expectedly much lower.

For Solana, however, it does process more than 2,500 TPS which is extremely fast compared to other projects such as Ethereum’s 15 TPS.

Recommended article: Is Cardano Faster Than Solana?

Cost

How much does it cost to perform a transaction on a given blockchain network over the other?

This factor is also important because it can influence a particular application’s appeal to its users over another with similar functionality. Generally, both Terra and Solana are very cost-effective because they use the PoS consensus mechanism.

However, Solana’s transaction cost is much cheaper at about <$0.01 on average compared to Terra’s $0.09. For perspective, Ethereum’s cost per transaction has previously risen to a high of over $180 on the popular Compound Defi app.

Taking the three factors into consideration, it is easy to conclude that Solana does beat Terra in several important aspects.

However, whichever of these projects will be better will depend, to a large extent, on the user’s needs.

Check Is Solana A Blockchain?

What Is The Relation Between Luna And Solana?

Terra LUNA and Solana have few if any similarities that define their connection to each other.

For one, they are both decentralized networks that rely on staking to achieve consensus within their respective nodes. In particular, Terra uses PoS while Solana uses a merged consensus mechanism that employs both PoS and Proof of History (PoH).

Secondly, both networks can be considered smart contract platforms even though Terra is more focused on hosting decentralized finance (Defi) apps while Solana takes a more general approach to launching any kind of dApp.

Finally, Terra and Solana both have native cryptocurrencies called LUNA and SOL, respectively. The two assets are both used for governance and as staking assets to incentivize validators within each network.

Learn more: Terra Luna Vs. Terra USD

Final thoughts

The main difference between Terra Luna and Solana is the application. As we have discussed in this guide, Terra is more focused on hosting Defi-based dApps while Solana has no focus. It can host any kind of dApp. Doing that means that it becomes a direct rival to Ethereum, the leading smart contract platform.

Want to learn how Luna compares to another big name in crypto? Read our comparison of Luna and Cardano.