From 'Ethereum Killer” to Partner: Understanding Solana's Transformation Path in One Article

Original title: "Solana is the reason why L2 rollups chaos started on Ethereum."

Solana is the reason why L2 rollups chaos started on Ethereum.

During the bull run of 2021, we witnessed the competition among L1 blockchains for the title of “Ethereum Killer”.

However, no one wins this competition. The founders realized, “If you can’t beat ’em, join ’em.”

The reason for this transformation is Solana.

From the beginning to the end of 2022, most L1 blockchains lost more than 90% of their native currency value.

All blockchains are trying to solve the blockchain trilemma, claiming that they are faster and more secure than Ethereum.

However, no one really wins this competition because competing against the giants is difficult.

Imagine starting from scratch and trying to build a wallet that competes with @MetaMask. You might have a better UX/interface, better functionality, and better processes.

But most people will still choose MetaMask, just because they are used to it.

1. Solana has become the only non-EVM blockchain that users care about.

You can’t say the same for other non-EVM blockchains like @NEARProtocol, @Cardano, @Algorand or @kadena_io.

The 2021 landscape is like this

The current TPS on these chains will not exceed 10 when talking about real users.

Solana also has some well-publicized issues:

• Multiple closures

• "Contact" with SBF and FTX

• @okx delisted USDC and US on Solana DT

• @DeGodsNFT Bridge to Ethereum

• There are 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 resolve all issues and basically just keep moving forward and overcome the difficulties.

Solana isn’t winning the L1 battle, but exploring a different path that hasn’t been explored before, thanks to @0xMert_ and @SuperteamDAO and other core contributors.

2. Blockchains cannot compete for liquidity in the L1 space, so they decided to benefit from it rather than compete.

Why compete with Ethereum when you can benefit directly from it?

Deploying L2 often means benefiting from the Ethereum economy while having your own economy.

If you are a rollup, it is easier to attract liquidity because you are built on a native chain with hundreds of millions of TVL.

At the same time, creators have the ability to create their own native tokens and have their own small economy in this large ecosystem.

Also, creating rollups is now easier than ever: you have multiple solutions, @conduitxyz, @alt_layer and of course @Optimism’s OP Stack.

3. The liquidity fragmentation chaos on L2 is actually social fragmentation.

Each L2 has its own focus:

- @Optimism focuses on scalability. -@arbitrum focuses on DeFi. -@base focuses on SocialFi. -@MetisL2 focuses on DAO.

Isn’t this bad? of course not!

Every rollup is unique and has the opportunity to have its own identity, but sometimes, those who loudly complain about liquidity fragmentation are the same people.

As @eawosikaa pointed out at the ethCC conference, people mainly attend side events because they can more easily find like-minded people there.

However, I think it’s important to not just present yourself as a zksync fanatic, but to be open to other cultures, ideas, and thoughts.

We are playing in the same sandbox (Ethereum).

4. On Ethereum, people build rollups. On Solana, people build applications.

If I had to compare the current state of these two ecosystems, this is the picture I would paint.

Currently, there is no real competition between Ethereum and Solana as these blockchains simply serve different purposes.

Ethereum has become a big sandbox where kids (developers) build sandcastles (rollups).

More and more developers are focusing on deploying the same dapp to multiple rollups.

I think this could be a problem as some developers are more focused on bringing liquidity to the app rather than building a really good app.

Solana is the same sandbox, but here the sandcastles are apps and currently they are even more beautiful.

• There is no better exchange experience than using @JupiterExchange.

• There is no better wallet experience than @phantom.

• There are even native liquidity providers for non-native assets like @CloneProtocol.

@jito_sol was able to create the best liquid staking experience on Solana, including MEV rewards, which was not possible before.

But things are not that simple.

5. Solana’s current phase is similar to Ethereum’s previous phase.

The reason why people started migrating to L2 and creating new L2 is because of the limitations of the native chain.

Some of you remember 2021 when you had to pay $200-$300 in fees to do an exchange.

Ethereum itself cannot handle this much throughput, so a solution is needed to increase throughput and lower fees to make the network usable.

Solana is able to handle the activity it has now, but there are some limitations in Solana's architecture:

• Block leaders are bombarded with bot spam, causing transactions to fail.

• Failed transactions waste computing units and network bandwidth.

• The fee mechanism has neither incentive efficiency nor incentive compatibility.

To resolve these issues, you don’t actually need to create an L2 on Solana.

In my opinion, creating L2 on Solana is justified in two scenarios:

1. The network cannot handle a large number of transactions even after all the tweaks, or it can, but the fees are high enough .

2. Create an application chain to take advantage of Solana’s liquidity while still being able to own a part of your own economy in your chain.

Perhaps we will see L2 competition on Solana similar to the current Ethereum competition in the future.

There is no absolute winner here. In the end, cooperation often trumps competition.

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