Solana and Ethereum are "quarreling", how will the community stand?

On June 3, Bankless released a video titled "ETHEREUM VS. SOLANA: Which Blockchain Wins 2024 Beyond?", inviting Solana founder Anatoly Yakovenko and Ethereum Foundation researcher Justin Drake to talk about their respective views on the Ethereum and Solana ecosystems. This nearly two-hour debate from the crypto community's super ecosystem has received a lot of attention in the overseas community.

The two most watched ecosystems in the crypto industry present their respective disputes in this video in the form of direct dialogue between "representatives". Even ordinary community users who don't know much about the specific technical details can feel the "temperament difference" between Ethereum and Solana.

As community user Phoenixzen83 summarized, SOL stands for "pragmatic, executive, action-biased, user-obsessed, realist, early failure/fast/iteration/improvement/breaking boundaries/finding PMF, application/product-centric", and ETH stands for "academic, idealistic, simple, strict in all edge cases, focused on infrastructure, slow and steady movement/battle-tested security".

Dragonfly founder Haseeb, Messari product vice president Jimmy Skuros and others forwarded and recommended this video, and Delphi Digital founder Tommy also made an AI summary for this video. The community also launched many derivative discussions around this debate.

BlockBeats organized the video content in this article and sorted out the relevant discussions in the community that are worth paying attention to.

What topic was debated?

For the crypto community, the technical and ecological disputes between Ethereum and Solana are already a commonplace topic. But in this video, Bankless set the discussion agenda as four parts: "good, bad, ugly, and final". The two representatives successively elaborated on their optimistic views on the Ethereum and Solana ecosystems, pointed out the temporary and solvable deficiencies in the ecosystems, expressed their views on the other party's ecosystems that were difficult to fix in the "ugly" part, and made a "concluding statement" at the end to express the ultimate vision of the ecosystem.

「Good」：

1.Justin praised Solana for its high throughput, low fees, good user experience, wide adoption, and good financial performance, and believed that it was part of a healthy competition that could accelerate the development of Ethereum.

2.Anatoly praised Ethereum's large-scale distributed node network and strong security guarantees, believing that it is superior to the simple majority honesty assumption.

「Bad」：

1.Anatoly criticized Ethereum's EVM design and the split between L1 and L2, believing that this led to friction between developers and fragmentation of liquidity.

2.Justin believed that the short block time and low slot-to-ping ratio in Solana's design could lead to centralized time attacks by validators.

「Ugly」：

1.Justin believes that Solana’s isolation from Ethereum’s network effects as L1 limits its potential.

2.Anatoly believes that Ethereum’s focus on “ultrasound money” makes it difficult to extract value from execution/transaction fees.

「Final」：

1.Anatoly believes that Solana will optimize hardware/bandwidth improvements to provide the fastest and cheapest global state applications.

2.Justin believes that Ethereum’s network effects and composability make it the dominant “value internet”, and Solana has a small chance to surpass its position.

Key points of debate:

1. Whether high token issuance or inflation will lead to additional costs for the network or users, especially considering that staking rewards may be subject to taxes. (Justin thinks so, Anatoly disagrees).

2. The importance of economic security in blockchain networks and the cost of 51% attacks (Justin thinks this question is critical, Anatoly thinks it is just a joke and calls it a "meme").

3. Solana's low slot-to-ping ratio may lead to centralization risks due to timing attacks (Justin believes it will lead to centralization, Anatoly disagrees).

How does the community stand?

Matthew Sigel, head of research at Van Eck (supporting Justin):

The winner is Justin, although it was a hard-fought victory, it was still a pyrrhic victory.

1. The issue of economic security is not a joke. Drake is right that economic security is very important, and Toly is stupid to try to deny it. If 51% (or 66%) of the stake is controlled, a large amount of locked value may be seized in an attack. Economic security is critical.

2. The tax issue does bring some selling pressure, because the tax obligations generated by staking rewards will cause holders to have to sell tokens to pay the taxes. This is considered a cost of the network, just like miners use Bitcoin to pay for mining expenses (such as electricity costs), this expenditure is also a cost.

3. The discussion about short block times on Solana for MEV leads to more centralization is very interesting, but data needs to be obtained through empirical discussion. As far as we know, Ethereum has 7200 blocks per day, while Solana has 216000 blocks. Each block confers ordering rights. It is easier to win these blocks if you are very close because you have an information advantage and are able to get the "last say" in the block auction. In theory, this advantage only applies to the last part of the transactions in the block, such as 100 milliseconds.

For Solana, 1/4 of the blocks provide a latency advantage, while for Ethereum it is 1/120. Presumably, you have more chances to get latency-sensitive MEV because you have more blocks. This means that short block times give those with extremely low latency many opportunities to better reschedule blocks. This should be centralization-prone because the best builders win. This explains why in our model, MEV accounts for a larger proportion of SOL revenue than ETH (68% vs. 38%). This is by design.

4.Justin mentioned that cryptocurrency is interdisciplinary, not just technology-oriented, which is important. Toly's approach is to simply build the fastest and best, perhaps Solana's virtual machine can be deployed as an L2.

5.Justin mentioned validators as decentralized sorters to achieve MEV capture and Ethereum's fee capture. We are not sure how L2 (and token holders) will agree on this. Additionally, cross-L2 compatibility will require all L2s to migrate to ZK technology, which may take some time.

Sreeram Kannan, founder of Eigenlayer (neutral):

Justin and Toly are both right, we still don't have good indicators.

1.Solana's shorter slot time does lead to less MEV (as Toly said); but it also leads to more timing games (as Justin said).

2. Ethereum's L2 roadmap bets on ETH as a "programmable decentralized currency" with a safe and available area covering all L2. Toly is right on this point. But as Justin pointed out, sequence-based and real-time proofs can bring all value accumulation back to L1, based on the utility of synchronous combination. Toly did not respond to this value proposition.

3.EVM and other virtual machines, the L2 roadmap design remains neutral to virtual machines, as long as zk proofs can be written in EVM.

4. On the issue of economic security, both immediate security and liveness are necessary.

5. Toly seems to think that liveness attacks are limited to MEV extraction. The total value of all lending markets, decentralized stablecoins, DEXs, fast options protocols, etc. is at risk due to validator censorship. This is because the security of a DeFi protocol relies on the liveness of L1. Similarly, this is also true for optimistic Rollups. So for the economic security of these DeFi protocols, the total stake should exceed the total amount on these protocols.

6. On the issue of TVL vs. trading volume, both indicators are corroded by reward chasing (the latter is easier).

Hayden, founder of Uniswap (neutral):

Support Justin on long-term thinking and Toly on short-term applications.

1. Agree with Justin that "transaction demand will far exceed the levels we see today." Agree with Toly that "Ethereum's biggest obstacle is uncertainty about the long-term value of DA and uncertainty about the vision of "Ultrasound Money."

2. Support Justin on network effects, research, and long-term thinking; support Toly on applications, engineering, and near-term thinking.

3. I have no opinion on the discussion of token issuance and costs. I feel that the debate there is more like a discussion about terminology and definitions, and does not involve substantive issues.

4. Of course, we need to expand the discussion on these two aspects. Both Ethereum's seamless state machine and Solana's single state machine are worthy of attention.

Tesnor founder Richard (supporting Anatoly):

To some extent, economic security is indeed a stalk.

1. Anatoly (Solana) believes that the execution stage is the key to value accumulation. Good engineering design is more important than economic security because economic security may cover up design problems.

2. Justin (Ethereum) believes that lightweight clients should be possible. In the final state, economic security is indeed important.

3. Agree with the view that "economic security is a joke" because in some cases, measuring the security of the network by marking the total locked value (TVL) of inflation as market value is not enough to make up for the poor token design or poor engineering design of some projects. You can refer to the Terra project as an example. The TVL of inflation does not fully reflect the true value of the network.

4. But at the same time, if the external value on the PoS (Proof of Stake) chain far exceeds the holdings of the honest majority, then there may be a "liveliness attack", that is, an attack that exploits the vulnerability of network activity. Although the external value on most PoS chains has not yet exceeded the internal value, this may change in some cases.

Galaxy researcher Christine Kim (supporting Justin):

The lack of long-term thinking is the reason why SOL cannot catch up with ETH valuation.

1. The MEV part is the most interesting to me, and the question of whether edge validators can benefit from co-location is actually a centralized force or a negligible force, which even ETH stakeholders are struggling with.

2. I agree with Anatoly that economic security is the "meme" of POS blockchain networks, and that a rollup-centric roadmap will lead to fragmentation and low l1 revenue. But in my opinion, Justin Drake's final idea allows ETH to have the most compelling network effect, which is why Solana may never catch up with ETH's valuation.

3. After all, cryptocurrency valuations are rarely based on fundamentals.

Trader Vapor (supporting Toly)

Comparing Ethereum in the next 20 years to Solana today is nothing more than wishful thinking.

1.Justin’s main arguments in favor of Ethereum remain TVL, brand, reputation, and network effects. He argues that “Ethereum’s ecosystem is strong in quality, while Solana’s ecosystem is strong in quantity”, and believes that the market value of a single meme coin ($SHIB) on Ethereum is equivalent to the sum of the market values of all meme coins on Solana. Ethereum is a thriving and interconnected ecosystem, while Solana is a remote Pacific island that is closed to itself.

2.Justin talks about Ethereum’s millions of tps and “synchronous composability” between L2 as if it were already done. Surprised that the arguments of one of Ethereum’s main developers are so weak. All of these (reputation, brand, TVL) are not moats, and comparing Ethereum in 20 years to Solana today is nothing more than wishful thinking.

3. In fact, Ethereum’s value is being actively mined by L2 sorters on the execution side and DA protocols on the DA side. L2 is an isolated ecosystem that destroys the killer app of smart contract platforms, which is composability.

4. The only things left are memes like Ultrasound Money, ETFs, and the "legitimacy" of $ETH assets vs. $BTC. That's still a lot, but none of it relies on the technology itself, but partly involves faith.

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