Ethereum
Ethereum in Trouble? Solana Launches L2 Rollup Strategy
The L2 Rollup War Is Intensifying! In an epic shift in blockchain strategy during the 2021 bull market, many Layer 1 (L1) blockchains have attempted to challenge Ethereum domination. None succeeded, leading to a shift from direct competition to collaboration. Solana was a key factor in this change.
The decline of L1 blockchains
Pavel Paramonov, blockchain researcher at Dewhale Capital, note that by the end of 2022, most L1 tokens have lost over 90% of their value. Despite claims that they are faster or more secure than Ethereum, these blockchains have struggled to surpass Ethereum’s position. It’s like trying to build a better wallet than MetaMask: users stick with what they know.
Solana’s unique success
However, the analyst dug deeper and found that Solana has emerged as the most notable non-Ethereum blockchain, unlike other non-EVM blockchains such as NEAR, Cardano, Algorand, or Kadena. Despite issues such as network outages and controversies, Solana has stood out because it has focused on user needs and technological advancements, thus showing a different path from other L1s.
Managing Fragmentation in Ethereum Layer 2 Solutions
Instead of competing with Ethereum, many blockchains have turned to creating Layer 2 (L2) rollups on Ethereum. This strategy has allowed them to leverage Ethereum’s vast ecosystem while growing smaller economies. Simple tools like Conduit, AltLayer, and Optimism’s OP Stack have made creating these rollups easy.
But this has been difficult because the diversity of L2 rollups has led to a fragmentation of liquidity, with each rollup serving a different purpose: Optimism for scaling, Arbitrum for DeFi, Base for SocialFi, and Metis for DAOs. This fragmentation has garnered mixed reactions from the Ethereum community and is more of a social problem than a technical one.
Ethereum vs Solana
Since the blockchain’s launch, there have been two main competitors: ETH and SOL. Ethereum is called a “sandbox” where developers create various projects and pools. Developers often focus more on generating liquidity for these pools than on improving applications. In contrast, Solana has focused more on creating high-quality applications, such as Jupiter Exchange for exchanges and Phantom for wallets.
Solana’s Future Challenges
The analyst also noted that Solana’s current situation is similar to Ethereum’s past challenges. Issues like high transaction fees and network limitations led to the creation of Ethereum L2 solutions. Solana faces similar issues with its architecture, including transaction failures due to bot attacks and inefficient fee mechanisms. While creating L2 on Solana isn’t necessary today, it could become relevant as the network evolves.
Overall, it will be interesting to see if Solana starts a L2 battle in the future like Ethereum, thus triggering a new wave of L2 solutions. Stay tuned with us to witness this epic clash.
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