Key Points
Ryan Berckmans, a member of the Ethereum community, has expressed skepticism about Solana’s potential to serve as the foundation of the emerging global financial system.
Solana’s Shift in Strategy
Initially, Solana (SOL) presented itself as capable of processing global transactions on a single chain. This stance changed with the recognition of the significance of Layer 2 (L2) solutions. The company rebranded these solutions as “Network Extensions,” rather than identifying them as L2s.
The acknowledgment of Ethereum’s (ETH) L2 backbone strategy by Solana came after it observed flagship applications developing custom L2 appchains on its network. This change in viewpoint was further emphasized when a significant Solana development team pivoted to construct a SVM L2 on Ethereum.
Ryan Berckmans, who previously worked as a senior engineer on the Augur Project, an Ethereum blockchain-based prediction platform, outlined several hurdles that Solana faces.
Solana operates with a single production client, agave rust, which Berckmans argues is insufficient for a global backbone that needs at least three independent chain clients with balanced stake distribution.
The development of Solana’s second client, Firedancer, has been delayed due to the absence of a proper protocol specification and research community.
Solana’s high bandwidth requirements, recommending 10Gbps upload, pose significant centralization risks and practical limitations. These requirements challenge the concept of a global backbone that should function anywhere.
Furthermore, Solana’s history of outages and the lack of protocol-level fallback capabilities present additional risks.
Berckmans also pointed out that unlike Ethereum, Solana cannot continue producing blocks when finalization issues arise.
According to Berckmans, economic centralization is another major concern. With approximately 98% insider allocation from their initial coin offering, compared to Ethereum’s 80% public sale, Solana’s decentralization is questionable.
The advent of zk proof aggregation for L2 settlement further undermines Solana’s position. Solana’s focus on L1 execution scaling conflicts with the requirements for a global backbone.
Berckmans anticipates that Solana’s market share will continue to decrease year over year compared to Ethereum’s combined L1 and L2 ecosystem. He points to major corporations like Coinbase, Kraken, Sony, and Visa choosing Ethereum L2 solutions as evidence of the market’s direction.
Despite Solana’s strengths in areas such as meme coin growth and price appreciation, its fundamental limitations, according to Berckmans, prevent it from serving as the backbone of a global financial system.
