In the rapidly evolving world of blockchain technology, transaction per second (TPS) has often been heralded as the gold standard for measuring a network's efficiency and potential for mass adoption. Influencers and proponents, particularly from high-throughput platforms like Solana, tout impressive TPS figures as evidence of superiority. However, recent events and historical precedents suggest that TPS, while important, is merely one piece of a much larger puzzle. The Bitcoin Paradox: Low TPS, High Trust Bitcoin, the pioneer of blockchain technology, processes a modest number of transactions per second compared to newer platforms. Its mempool is often clear, and network activity can be relatively low. Yet, Bitcoin remains the most valuable cryptocurrency by market capitalization. This enduring dominance isn't due to TPS but stems from its capped supply, decentralized nature, and unwavering monetary policy. Bitcoin's success underscores that trust, predictability, and security can outweigh raw throughput. Decentralization and security must not be sidelined in discussions about TPS. While high TPS may appeal to users seeking speed and scalability, it should not come at the expense of the core principles that define blockchain technology. Cardano, for example, is often cited as one of the most decentralized blockchains in the industry—a distinction that carries weight for users who prioritize resilience, censorship resistance, and governance. In fact, one could argue that decentralization isn’t just a feature—it’s the very reason the crypto industry was born. We shouldn't expect venture capital firms, institutional investors, banks, speculators, or governments to champion maximum decentralization. Their incentives lie elsewhere. Banks, for instance, will naturally gravitate toward high TPS chains because they enable the immediate deployment of customer-facing services. Speed and efficiency align with their business models, but decentralization does not. The pursuit of control, influence, and profit is deeply embedded in human nature. Those who seek to dominate systems are unlikely to advocate for systems they cannot dominate. The responsibility to preserve and advance decentralization rests with us. Monetary Policy: Stability vs. Flexibility A blockchain's monetary policy plays a crucial role in its long-term viability. Bitcoin's fixed supply of 21 million BTC coins offers predictability, fostering investor confidence. Cardano, with 45 billion ADA coins and on-chain governance, has similar characteristics. In contrast, platforms that frequently adjust their monetary policies or have infinite inflation models can introduce uncertainty and unpredictability. While flexibility allows for adaptability, it can also lead to instability, as seen in projects that have suffered from sudden policy shifts. Remember the ambitious push to turn Ethereum into “ultrasound money”? That narrative seems increasingly outdated. Ethereum has reverted to being inflationary. Supporters of the inflationary model argue that a never-ending inflation model is necessary to maintain sustainable rewards for network validators. However, this claim rests more on assumption than evidence. Over the long term—say, ten to twenty years—the market price of coins will likely play a far more significant role in determining full-node operator incentives than marginal inflation. Issuing more coins doesn’t guarantee network security if their value diminishes over time. For long-term holders, monetary policy is just as critical as transaction throughput. While TPS is a technical feature—something that can be optimized and is generally seen as a welcome improvement—monetary policy touches the very foundations of a network’s value proposition. Unlike performance upgrades, any adjustment to issuance or supply dynamics is inherently more contentious, as it directly affects the trust and predictability that long-term investors rely on. Staking Mechanisms: Liquid vs. Locked Staking is integral to many Proof-of-Stake blockchains, influencing both security and user engagement. Cardano’s liquid staking offers flexibility, allowing users to access their funds readily. Some enthusiasts view cryptocurrencies as a new and improved form of money. Others approach them primarily as investments. While these perspectives may differ, both groups benefit from instant liquidity. The ability to quickly and efficiently exchange coins for goods, services, or fiat gives cryptocurrencies utility, whether as a medium of exchange or a tradable asset. Without liquidity, neither vision—currency nor investment can truly function at scale. The practice of locking coins for staking, common across most Proof-of-Stake projects, including Ethereum, presents a clear drawback for users. Instead of retaining access to their native tokens, stakers receive derivative tokens that represent their locked assets. In the DeFi ecosystem, these derivatives are then used in place of native coins. This adds an extra layer of abstraction and risk, undermining the simplicity and direct utility of the original asset. For many users, especially those seeking liquidity and straightforward asset management, this is a non-trivial trade-off. Token Unlocks and Fair Distribution The initial distribution of tokens and subsequent unlock schedules can significantly influence a blockchain's ecosystem. A recent example is the Mantra (OM) token, which experienced a dramatic 90% price drop within 24 hours. On-chain data revealed that approximately $227 million worth of OM tokens were moved to exchanges prior to the crash, raising concerns about insider activities and the fairness of token distribution. Such events highlight the risks associated with uneven token allocations and the importance of transparent, equitable distribution models. Cardano stands out for its fair initial coin distribution and the absence of any token unlock events. All new ADA enters circulation gradually through staking rewards, which significantly reduces the likelihood of a sudden, large-scale sell-off. As a result, the risk of a single entity flooding the market and triggering a dramatic price collapse—say, a 90% drop within days—is minimal. While high TPS may appeal to long-term holders seeking scalability, it’s not the only metric that matters. If the project involves substantial upcoming unlocks or if a large portion of the token supply is controlled by VC funds, holders must account for the risk of heavy sell pressure. In such cases, TPS becomes irrelevant if the asset’s price collapses under the weight of poor tokenomics. Governance: Decentralized Decision-Making Effective governance structures are vital for the adaptability and resilience of blockchain networks. On-chain governance allows stakeholders to participate directly in decision-making processes, promoting transparency and collective responsibility. In contrast, projects where decisions are centralized within a core team can face challenges related to trust and accountability. Decentralized governance not only democratizes control but also aligns the network's evolution with the community's interests. Decentralization advocates may gravitate toward projects like Cardano, not just for their technical merits, but for their potential to pioneer alternative forms of governance that could one day influence broader societal systems. While sufficient TPS is necessary to support such ambitions, it doesn't all have to happen on Layer 1—Layer 2 solutions can provide the needed scalability without compromising decentralization. Importantly, the value of holding coins extends beyond TPS. Decentralized governance and DAOs, though less visible in the current market narrative, remain foundational to the vision of a more participatory, resilient digital infrastructure. For some, the ability to shape governance mechanisms is itself a compelling reason to hold and engage with a given blockchain. Case Study: Solana's High TPS and Systemic Challenges Solana is often lauded for its high TPS, positioning itself as a scalable solution for decentralized applications. However, this performance has come with trade-offs. The network has faced multiple outages, and a significant portion of its transactions are attributed to bots or failed attempts. Moreover, Solana's monetary policy includes infinite inflation, and its initial token distribution heavily favored insiders. These factors raise questions about the sustainability of its model and whether high throughput alone can compensate for underlying systemic issues. Cardano boasts 100% uptime and has never required a network restart, placing it second only to Bitcoin in terms of uninterrupted operation. This level of reliability is not just a technical achievement; it’s a strong indicator of network maturity and decentralization. In contrast, every network restart—even if well-intentioned—introduces risk. It often implies some degree of centralized coordination, raising questions about who has the authority to pause and resume the network. For users who value trust-minimization and systemic resilience, this is a valid concern—and a compelling reason to favor networks with a track record of continuous, autonomous operation. Cardano: A Balanced Approach Cardano presents an alternative model, emphasizing a balanced approach that prioritizes security, sustainability, and community involvement. While its TPS is currently lower than some competitors, ongoing developments like Hydra and Leios aim to enhance scalability. Ouroboros Leios addresses this directly on L1. Cardano's capped supply, fair token distribution, and commitment to on-chain governance foster a robust and trustworthy ecosystem. This strategy underscores the belief that long-term success is built on a foundation of trust and deliberate progress rather than rapid, potentially unstable growth. Eventually, all major blockchains in the top ten are likely to achieve high scalability, except Bitcoin. Yet despite its limited throughput, Bitcoin may still retain its dominant position. That’s because scalability is ultimately a solvable, time-dependent challenge. What truly sets blockchain systems apart is not just how fast they process transactions nowadays, but how they function as comprehensive, decentralized infrastructures. Focusing solely on TPS risks overlooking the broader technological, economic, and ideological dimensions that define this space. To truly understand blockchain, one must approach it holistically—as a foundational shift in how value, governance, and trust are managed in the digital age.
