Blockchains such as Solana claim to offer ‘speed’ — however, this may be misleading.

The throughput of blockchains — specifically, their capacity to handle X number of transactions per second (TPS) — is frequently emphasized in a manner that diminishes the importance of other factors, such as decentralization and security. The blockchain trilemma recognizes that achieving success in all three domains is difficult, though not unattainable.

It is undeniable that throughput and scalability are crucial, indeed essential, if blockchains are to ultimately serve as the foundation for the financial system. Nevertheless, there exists a significant misunderstanding regarding the metric employed to evaluate the scalability of layer-1s and 2s.

While ultra-fast blockchains are eager to showcase their TPS figures, this method is rather insufficient for evaluating throughput and does not accurately reflect genuine blockchain transactions. Furthermore, these figures are often presented in inconsistent or erratic manners, complicating comparisons between projects and obscuring what is most relevant in practice.

Thus, when networks boast about achieving five-figure TPS rates, it is advisable to approach their bold assertions with skepticism.

A missold metric

If blockchain technology is to be widely adopted, it must be capable of managing substantial data volumes at high speeds. This ensures that users can access the network as needed, without facing congestion or incurring exorbitant transaction fees. This is evident.

However, a high TPS does not necessarily guarantee this, as the figure is typically calculated by transferring a protocol token from one wallet to another as quickly as possible. This represents the most fundamental transaction that can occur on a blockchain. Sending protocol tokens is not particularly computationally demanding, which is why it is less expensive to send Ether (ETH) compared to transferring an ERC-20 token — the latter involves significantly more complex data.

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In fact, most transactions are more intricate than simple transfers. DeFi transactions, for example, require considerable resources, which accounts for the higher gas costs associated with token swaps compared to straightforward transfers. Additionally, some chains incorporate transactional data that is not typically counted as transactions on other networks.

For instance, on Solana, approximately 80% of transactions consist of its own consensus messages, which are necessary for coordinating validators. Although these are processed separately from on-chain transactions, they are confusingly grouped with user transactions on Solana’s blockchain, leading to an inaccurate representation of its actual TPS.

TRANSACTIONS PER SECOND BETWEEN BLOCKCHAINS
The chart below illustrated the Transactions per second across blockchains. Currently, @solana remains the layer 1 capable of managing the highest number of transactions simultaneously, at 65,000 TPS, with nearly zero cost! #SolanaSummer #Solanaszn pic.twitter.com/kE7nrJ7Rzi

— Solana Daily (@solana_daily) September 13, 2021

Throughput is not the sole indicator of blockchain performance; latency also plays a role, referring to the speed at which a transaction is confirmed after submission. This has its own measurement units — specifically, block time (the interval between blocks being added to the chain) and time to finality (when a block surpasses the threshold beyond the risk of reversal).

While throughput is often regarded as the key figure, users are generally more concerned with latency — the speed of transaction execution — and the associated transaction fees. Similar to throughput, latency is complex, as it is influenced by various factors, including transaction fees (on certain chains, users can pay more for higher priority inclusion), system demand, and batching rules.

Swaps per second > TPS

In a swap transaction:

• The liquidity pool’s balance must be assessed to determine the swap rate
• Token A is sent from the end-user to the swap pool
• Token B is sent from the swap pool to the end-user
• The pool must then be rebalanced
• A fee is typically deducted, and the yield is transferred to another account

If it isn’t already clear, this process necessitates an entirely different measurement approach — one that excludes non-transactional data like that of Solana: swaps per second (SPS). Research conducted by consumer insights agency Dragonfly indicates that a suitable benchmark for evaluating throughput is to fill an entire block with Uniswap v2-style trades and determine how many trades are successfully completed per second. This method provides a straightforward apples-to-apples comparison of Ethereum Virtual Machine (EVM) blockchains, surpassing what any TPS measurement could achieve.

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According to Dragonfly’s findings, Solana’s mainnet can likely handle around 273 swaps/second on an automated market maker — a significant difference from its claimed 3,000 TPS. Meanwhile, BNB Smart Chain achieved 194.6 TPS (claimed: 300 TPS) and Avalanche reached a maximum of 175.68 (claimed: 4,500 TPS).

Better benchmarking is required

To clarify, no metric is flawless. Any blockchain comparison must take into account various elements, such as decentralization, usability, security, tooling, etc. However, it is evident that swaps per second serve as a more accurate measure of performance and throughput than transactions per second.

Based on the insights from Dragonfly, along with the EOS Network Foundation’s similar benchmarking for the EOS EVM, blockchains still have considerable progress to make before they are prepared for widespread adoption.

Zack Gall is the co-founder and chief communications officer of the EOS Network Foundation. He previously co-founded Dappiness Development Studio and served as the head of community and developer relations for LiquidApps. He graduated from Muskingum University in 2009 with a BA in communication and media studies.

This article is intended for informational purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.