Author: Joyce, BlockBeats
Title: Solana and Ethereum “Fight”, How Does the Community Take Sides?
On June 3rd, Bankless released a video titled “ETHEREUM VS. SOLANA: Which Blockchain Wins 2024 & Beyond?”, featuring discussions between Solana founder Anatoly Yakovenko and Ethereum Foundation researcher Justin Drake regarding their perspectives on the Ethereum and Solana ecosystems. This debate, which lasted nearly two hours and involved representatives from the crypto community, garnered significant attention overseas.
The two most prominent ecosystems in the crypto industry engaged in a direct conversation in this video, allowing even ordinary community users who may not be familiar with specific technical details to perceive the “personality differences” between Ethereum and Solana.
As summarized by community user Phoenixzen83, SOL represents “practical, executable, action-oriented, user-obsessed, realists, early failures/rapid/iterative/improvements/breakthroughs/seeking PMF, application/product-centric”, while ETH represents “academic, idealistic, simple, strict under all marginal conditions, focused on infrastructure, moving slowly and steadily/through battle-tested security”.
Notable figures such as Dragonfly founder Haseeb, Messari VP of Product Jimmy Skuros, and Delphi Digital founder Tommy recommended this video, with Tommy even providing an AI summary of the video. The community engaged in various derivative discussions surrounding this debate, and BlockBeats compiled the video content and highlighted relevant discussions within the community.
What were the debated topics?
For the crypto community, the ongoing debate between Ethereum and Solana’s technology and ecosystems is a well-worn topic. In this video, Bankless structured the discussion agenda into four segments: “good, bad, ugly, final”. The representatives elaborated on their positive views of the Ethereum and Solana ecosystems, pinpointed temporary and solvable shortcomings within the ecosystems, expressed their views on the irreparable flaws in each other’s ecosystems in the “ugly” segment, and concluded with their visions for the ecosystems in the “final” segment.
“Good”:
1. Justin praised Solana for its high throughput, low fees, excellent user experience, widespread adoption, and strong financial performance, believing it to be a healthy part of competition that can accelerate Ethereum’s development.
2. Anatoly praised Ethereum for its large-scale distributed node network and robust security, deeming it superior to a simple majority honest assumption.
“Bad”:
1. Anatoly criticized Ethereum’s EVM design and the split between L1 and L2, which he believes has led to friction among developers and fragmented liquidity.
2. Justin, on the other hand, pointed out that Solana’s design with short block times and low slot-to-ping ratio may lead to validators being vulnerable to time attacks.
“Ugly”:
1. Justin argued that Solana’s network effect isolation as L1 from Ethereum restricts its potential.
2. Anatoly believed that Ethereum’s focus on “ultrasound money” makes it difficult to derive value from execution/transaction fees.
“Final”:
1. Anatoly stated that Solana will optimize hardware/bandwidth improvements to provide the fastest, cheapest global state applications.
2. Justin argued that Ethereum’s network effect and composability make it the dominant “value internet”, while Solana has a slight chance to surpass its position.
Key points of contention:
1. Whether a high token issuance or currency inflation will result in additional costs for the network or users, especially considering that staking rewards may require tax payments (Justin agrees, Anatoly disagrees).
2. The importance of economic security in blockchain networks and the issue of the cost of a 51% attack (Justin views this as a critical issue, Anatoly considers it a “meme”).
3. The risk of centralization due to Solana’s low slot-to-ping ratio potentially leading to time attacks (Justin believes it will lead to centralization, Anatoly disagrees).
How does the community take sides?
Van Eck’s research director Matthew Sigel (supporting Justin):
The winner is Justin, albeit a hard-fought victory.
1. Economic security is no joke. Drake is right; economic security is crucial, and Toly’s attempt to deny this is foolish. If 51% (or 66%) of staking is controlled, a significant amount of locked value may be seized in an attack. Economic security is essential.
2. The tax issue will indeed bring some selling pressure, as staking rewards’ tax obligations may force holders to sell tokens to pay taxes. This is seen as a cost of the network, similar to miners using Bitcoin to pay mining fees (such as electricity costs), this expense is also a cost.
3. The discussion about MEV and the potential for more centralization due to Solana’s short block time is very interesting, but empirical discussions are needed to obtain data. As far as we understand, Ethereum has 7,200 blocks per day, while Solana has 216,000 blocks. Each block grants sorting rights. Winning these blocks will be easier if you are very close because you have an informational advantage, enabling you to have the “last word” in block auctions. In theory, this advantage only applies to the last part of the block, such as 100 milliseconds.
For Solana, 1/4 blocks provide a delayed advantage, whereas for Ethereum, it’s 1/120. Speculating, you have more chances to get MEV sensitive to delays because you have more blocks. This means that the short block time gives those with very low latency many opportunities to better rearrange blocks. This should be centralized because the best builders will win. This explains why in our model, the proportion of MEV to SOL revenue is larger than ETH (68% vs. 38%). This is by design.
4. Justin mentioned that cryptocurrencies are interdisciplinary, not just technology-oriented, which is crucial. Toly’s approach is simply to build the fastest and best, perhaps Solana’s virtual machine can be deployed as an L2.
5. Justin mentioned validators as decentralized sorters to capture MEV and Ethereum’s fee capture. We are unsure how L2 (and token holders) will agree on this. Furthermore, cross L2 compatibility will require all L2s to move to ZK technology, which may take some time.
Eigenlayer founder Sreeram Kannan (neutral):
Justin and Toly are both right; we still do not have good metrics.
1. Solana’s shorter slot time will indeed lead to fewer MEV (as Toly said); but it will also lead to more time games (as Justin said).
2. Ethereum’s L2 roadmap relies on ETH as a “programmable decentralized currency”, with a secure and available area covering all L2s. Toly is correct on this point. However, as Justin pointed out, based on sequence and real-time proofs, all accumulated values can be brought back to L1, based on synchronous utility. Toly did not respond to this value proposition.
3. EVM and other virtual machines, the L2 roadmap design is neutral about the virtual machine, as long as zk proofs can be written in EVM.
4. On economic security issues, both real-time security and activity are necessary.
5. Toly seems to believe that activity attacks are limited to MEV extraction. Due to validators’ scrutiny, the total value of all lending markets, decentralized stablecoins, DEXs, fast options protocols, etc., are at risk. This is because the security of a DeFi protocol depends on the activity of L1. The same is true for optimistic Rollups. So, for the economic security of these DeFi protocols, the total staking amount should exceed the total amount in these protocols.
6. Regarding the issues of TVL and transaction volume, both of these metrics are eroded by reward chasing (the latter is easier).
Uniswap founder Hayden (neutral):
Supports Justin in long-term thinking, supports Toly in short-term applications.
1. Agrees with Justin’s point that “transaction demand will far exceed what we see today”. Agrees with Toly’s point that “Ethereum’s biggest obstacle is the uncertainty of DA long-term value and the uncertainty of the ‘Ultrasound Money’ vision”.
2. Supports Justin in terms of network effects, research, and long-term thinking; supports Toly in terms of applications, engineering, and short-term thinking.
3. No opinion on the discussion of token issuance and costs, feels that the debate there is more about terminology and definitions, not substantive issues.
4. Of course, we need to expand discussions in both of these areas, the seamless state machine of Ethereum and the single-state machine situation of Solana are both worth noting.
Tesnor founder Richard (supports Anatoly):
Economic security is somewhat of a meme.
1. Anatoly (Solana) believes that the execution phase is crucial for value accumulation. Good engineering design is more important than economic security because economic security may overshadow design issues.
2. Justin (Ethereum) believes that lightweight clients should be possible. In the final state, economic security is indeed crucial.
3. Agrees with the view that “economic security is a meme” because in some cases, measuring the security of the network by marking the total locked value of the currency inflation (TVL) as the market value is not enough to compensate for poor token design or poor engineering design in some projects. The Terra project can be used as an example, where the TVL of currency inflation does not fully reflect the true value of the network.
4. However, if the external value on a PoS (Proof of Stake) chain far exceeds the honest majority stake, then “activity attacks” may occur, exploiting vulnerabilities in network activity. Although most PoS chains currently have not exceeded internal values with external values, in some cases, this situation may change.
Galaxy researcher Christine Kim (supports Justin):
The lack of long-term thinking is why SOL cannot catch up to ETH valuation.
1. The MEV part is the most interesting to me, the question of whether marginal verifiers can benefit from co-location is actually a centralizing force or negligible force, a problem that even ETH stakeholders are working to solve.
2. I agree with Anatoly that economic security is a “meme” on PoS blockchain networks, and the roadmap centered on aggregation will lead to fragmentation and lower L1 revenue. But in my view, Justin Drake’s ultimate idea allows ETH to have the most compelling network effect, which is also why Solana may never catch up to ETH valuation.
3. After all, the valuation of cryptocurrencies is rarely based on fundamentals.
Trader Vapor (supports Toly):
Comparing Ethereum in the next 20 years with the current Solana is wishful thinking.
1. Justin’s main argument in support of Ethereum is still TVL, brand, reputation, and network effect. He argues that “Ethereum’s ecosystem is strong in quality, while Solana’s ecosystem is strong in quantity”, believing that the market value of a single meme coin ($SHIB) on Ethereum is equivalent to the sum of all meme coin market values on Solana. Ethereum is a thriving and interconnected ecosystem, while Solana is a remote Pacific island, isolated in itself.
2. Justin talks about Ethereum’s millions of tps and the “synchronous composability” between L2s as if it’s already accomplished. It is surprising how powerless the argument of one of Ethereum’s main developers feels. All of these (reputation, brand, TVL) are not moats, comparing Ethereum in the next 20 years with the current Solana is wishful thinking.
3. In fact, Ethereum’s value is being actively mined by the L2 sorters on the execution side and the DA protocols on the DA side. L2 is an isolated ecosystem that destroys killer applications for smart contract platforms, namely composability.
4. The only thing left is memes like Ultrasound Money, ETFs, and the “legitimacy” of $ETH assets compared to $BTC. This is still a lot, but all of this does not rely on the technology itself but partly involves faith.
Video link
This article is authorized for reprint from BlockBeats.
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