From "Ethereum Killer" to Partner: Understanding Solana's Transformation Journey in One Article
If you can't beat them, join them.Original Title: “Solana is the reason why L2 rollups chaos started on Ethereum.”
Author: Pavel Paramonov
Translation: Deep Tide TechFlow
Solana is the reason for the chaos of L2 rollups on Ethereum.
During the bull market of 2021, we witnessed the competition among L1 blockchains for the title of "Ethereum killer."
However, no one won this competition. Founders realized that "if you can't beat them, join them."
The reason for this shift is Solana.
From the beginning to the end of 2022, the native coin values of most L1 blockchains lost over 90%.
All blockchains are trying to solve the blockchain trilemma, claiming they are faster and more secure than Ethereum.
However, no one really wins this competition because competing with giants is difficult.
Imagine starting from scratch, trying to build a wallet to compete with ++@MetaMask++. You might have a better user experience/interface, better features, and better processes.
But most people would still choose MetaMask simply because they are used to it.
- Solana has become the only non EVM blockchain that users care about.
You can't say the same about other non-EVM blockchains like @NEARProtocol, @Cardano, @Algorand, or @kadena_io.
The landscape in 2021 looked like this:
The current TPS on these chains does not exceed 10 when it comes to real users.
Solana also has some well-known issues:
Multiple outages
"Connections" with SBF and FTX
@okx delisting USDC and USDT on Solana
@DeGodsNFT bridging to Ethereum
And many more
However, it is the only team that truly cares about users, technology, and the future.
@aeyakovenko and team members received all this feedback and were able to address all issues, essentially just moving forward to overcome difficulties.
Solana did not win the L1 battle but explored a different path that had not been ventured before, thanks to @0xMert_ and @SuperteamDAO and other core contributors.
- Blockchains cannot compete for liquidity in the L1 space, so they decided to benefit from it rather than compete.
Since they can benefit directly from Ethereum, why compete with it?
Deploying L2 usually means benefiting from the Ethereum economy while having your own economy.
If you are a rollup, attracting liquidity is easier because you are built on a native chain with billions in TVL.
At the same time, creators have the ability to create their own native tokens, having their own small economy within this large ecosystem.
Moreover, creating a rollup is easier now than ever: you have multiple solutions, such as @conduitxyz, @alt_layer, and of course, @Optimism's OP Stack.
- The liquidity fragmentation chaos on L2 is actually a social fragmentation.
Each L2 has its own focus:
- @Optimism focuses on scalability.
- @arbitrum focuses on DeFi.
- @base focuses on SocialFi.
- @MetisL2 focuses on DAOs.
Isn't that a good thing? Certainly not!
Each rollup is unique and has the opportunity to have its own identity, but sometimes, those who loudly complain about liquidity fragmentation are precisely the same group of people.
As @eawosikaa pointed out at the ethCC conference, people mainly attend off-site events because they find it easier to connect with like-minded individuals there.
However, I think it is important not just to present oneself as a zksync enthusiast but to be open to other cultures, ideas, and thoughts.
We are playing in the same sandbox (Ethereum).
- On Ethereum, people build rollups. On Solana, people build applications.
If I had to compare the current state of these two ecosystems, I would depict it like this.
Currently, there is no real competition between Ethereum and Solana because these blockchains serve different purposes.
Ethereum has become a large sandbox where kids (developers) build sandcastles (rollups).
More and more developers are focusing on deploying the same dapp across multiple rollups.
I think this could become a problem because some developers are more focused on bringing liquidity to applications rather than building a truly good application.
Solana is the same sandbox, but the sandcastles here are applications, and they are currently more beautiful.
There is no better exchange experience than using @JupiterExchange.
There is no better wallet experience than @phantom.
There is even local liquidity provision for non-native assets, such as @CloneProtocol.
@jito_sol is able to create the best liquid staking experience on Solana, including MEV rewards, which was previously impossible.
But things are not that simple.
- The current stage of Solana is similar to the previous stage of Ethereum.
The reason people began migrating to L2 and creating new L2s is the limitations of the native chain.
Some people remember 2021 when you had to pay $200-300 in fees to make a single swap.
Ethereum itself could not handle such a high throughput, so a solution was needed to increase throughput and reduce fees to make the network usable.
Solana can handle its current activity, but there are some limitations in Solana's architecture:
Block leaders are spammed by bots, leading to transaction failures.
Failed transactions waste compute units and network bandwidth.
The fee mechanism does not incentivize efficiency and lacks incentive compatibility.
To address these issues, you actually do not need to create L2 on Solana.
In my view, creating L2 on Solana makes sense in two cases:
The network cannot handle a large number of transactions even after all adjustments, or it can handle them, but the fees are high enough.
Creating an application chain to leverage Solana's liquidity while still being able to have a part of your own economy within your chain.
Perhaps in the future, we will see L2 competition on Solana similar to the current Ethereum.
Here, there are no absolute winners. Ultimately, cooperation often outweighs competition.
