Original title: “Solana Need L2s And Appchains?”
Original article by Yash Agarwal
Original translation: Ladyfinger, BlockBeats
Editor’s Note:
As a high-performance public blockchain platform, Solana is facing unprecedented development opportunities and challenges. In this article, Yash Agarwal takes a panoramic and in-depth look at the key issues in the Solana ecosystem - modularity, application chains, and Rollups, and how they work together to drive Solana towards a broader future.
Introduction
A month ago, Vibhu, the founder of DRiP, the top free NFT distribution application on Solana, made a statement that sparked widespread discussion:
Solana will and needs to have Layer 2 and Rollup.
He expressed this view because DRiP loses about $20,000 in value per week as SOL prices and network congestion rise. The increase in Solana network activity has two effects:
Pros: Enhanced liquidity, increased capital and trading volume (thanks to composability)
Disadvantages: Rising infrastructure costs, poor user experience, network congestion
However, DRiP mainly distributes millions of NFTs from artists to thousands of wallets every week through Solana as infrastructure, and does not have much demand for high composability. Solana's TVL growth and capital inflows have little impact on DRiP, which is mainly plagued by high infrastructure costs.
Vibhu noted that “composability has diminishing returns.” He also mentioned that Solana application developers have privately discussed their need for Rollups because they can increase transaction throughput, reduce block space competition, and reduce fees. In addition, they can better control the economic value generated by the business.
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Solana has experienced multiple congestion events over the past few months, from JUP airdrops to ORE mining and meme coin trading at peak times. While some believe that Firedancer can solve these problems, the reality is that the timeline is unclear and it is currently not possible to scale more than 10x. Despite this, Solana is the only one of all the battle-tested major chains that remains a monolithic chain.
Should Solana remain a monolithic chain or become modular?
Will Solana also evolve into sharded Layer 2 and Layer 3 solutions like Ethereum?
What is the current situation of Solana’s application chain and Rollup?
To answer these questions and put together a summary, this article will explore various possibilities and discuss the pros and cons of each project. This article will not go into technical details, but will discuss various extension methods from a market-oriented and practical application perspective to provide an overview. All insights, no nonsense, just a lot of exclusive information.
In short, we will discuss the following questions:
Solana and the problem of network congestion
Making Solana modular
Solana Application Chain — with examples
Solana Layer 2 and Rollup — with examples
Infrastructure to support Rollup and application chains
Solana’s Problems and the Need for Modularity
First let’s discuss the current issues: the Solana network has been very congested recently due to airdrops, a surge in memecoin transactions (most of which have now been resolved), resulting in high ping times, high transaction failure rates, and increased network fees. Despite this, Solana has been able to maintain a transaction processing rate of 1-2 thousand transactions per second, which is more than all EVM chains combined. It can be said that this is a good problem for blockchains, and it also tests Solana’s monolithic chain theory.
The Solana Foundation recently published a blog post urging projects to take immediate actions to improve network performance, including:
· Implement priority fees: It is crucial to avoid delayed or lost transactions.
Make optimal use of the program's compute units (CUs): use only necessary resources.
Implementing stake-weighted Quality of Service (QoS): Allowing applications to prioritize users’ transactions.
However, these measures can only improve transaction completion rates to a certain extent and cannot guarantee a smooth transaction experience. One solution to this problem is the much-anticipated New Transaction Scheduler, which is scheduled to be introduced in version 1.18 in late April. The new scheduler will exist alongside the current scheduler, but will not be enabled by default, allowing validators to monitor the performance of the new scheduler and easily switch back to the old scheduler if problems arise. The new scheduler is designed to fill blocks more efficiently and affordably, improving the inefficiencies of the old scheduler.
Read this article to learn more about the new scheduler.
Anza, a forked entity of Solana Labs, has been working to resolve network congestion issues identified as being related to the QUIC implementation and the behavior of Agave (Solana Labs)’ validator client in handling a large number of requests.
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Although modularity advocates strongly advocate Solana’s “Modularity Roadmap”, Solana Labs/Anza, the core maintainer of the Solana protocol, is still focused on optimizing throughput and latency at the base layer. Potential improvements include:
Improved the fee market and increased the base fee (currently set to 5000 Lamports or 0.000005 SOL).
Implement exponential growth of account write lock fees, i.e. gradually increasing fees to curb spam.
Optimize CU budget requests through penalty mechanism.
Improve the overall network architecture.
Even if these vertical scaling,single chain,improvements are effective, we cannot rule out the,possibility of Solana adopting horizontal scaling,Rollup,. The reality is that Solana can combine these two features - it can serve as an excellent Rollup base layer, with ultra-low latency block time (~400 milliseconds), significantly improving the performance of Rollup, such as enabling fast sequencer soft confirmation . On top of that, Solana has a history of implementing changes quickly, which may make it more efficient than Ethereum as a base layer for Rollup.
Update: Anza has pushed out some patches that have helped alleviate ongoing network congestion issues, and will be making further enhancements in v1.18.
Making Solana modular
Solana's modular development plan has already begun. As shown in the Anza DevRel post, Solana validators and SVM (the execution environment that handles transactions and smart contracts/programs) are tightly coupled and maintained by Anza. However, the validator client and SVM runtime will be separated in the coming months. This separation will help create the "Solana Application Chain".
For Rollup, optimizing Solana’s data availability (DA) or blob layer may come at a later stage.
Source: Anza DevRel
Anza engineer Joe C also revealed plans to modularize the SVM, where the transaction processing pipeline will be stripped out of the validator and put into the SVM. This will enable developers to run an SVM implementation independently of any validator.
A standalone SVM would be a collection of completely independent modules. Any SVM implementation can drive these modules through well-defined interfaces, further reducing the barriers to SVM-compliant projects and significantly reducing the overhead required to build custom solutions. Teams can implement only the modules they are interested in while leveraging established implementations, such as those from Agave or Firedancer.
In short, Solana will become more plug-and-play, making Solana application chains and Rollups easier to implement.
In general, this can go in two directions: Layer2 (or Rollup) and application chain. We will introduce them one by one below.
Solana Application Chain
Also known as SVM forks, these are essentially forks of the Solana chain designed specifically for specific applications. Pyth was the first Solana application chain, but the concept really gained traction when Rune, the founder of Maker, proposed developing a Maker application chain based on the Solana (SVM) codebase for governance. Rune chose SVM because of its strong developer community and technical advantages over other VMs, aiming to fork the most performant chain to better meet consumer needs. Although it has not yet been implemented, this move has sparked widespread discussion about Solana application chains.
Generally speaking, they can be divided into two categories:
Permissionless — Anyone can join the network, similar to the current Solana mainnet.
Permissioned — Solana Permissioned Environments (SPEs), packaged by the Solana Foundation for institutions, allow entities to build and maintain their own chain instances, powered by the SVM.
Pyth — OG Solana Application Chain:
Pyth once accounted for 10-20% of all transactions on the Solana mainnet. However, it did not require any composability, so they simply forked Solana's codebase. This allowed them to take advantage of Solana's fast 400ms block time for high-frequency price updates. Pythnet is the first network to adopt SVM as its application chain.
The Pythnet application chain is an authority proof-of-authority fork of the Solana mainnet that serves as a computing base layer for processing and aggregating data provided by the Pyth data publishing network.
Why did Pyth migrate?
It does not require high composability, especially for non-Solana applications, and is therefore immune to mainnet congestion.
It requires a permissioned environment to publish data.
Reduce infrastructure costs by internalizing fees that would previously leak onto the base layer, Solana.
Cube Exchange is another example, a hybrid CEX deployed as a sovereign SVM application chain with a fully offline order book and settlement on its SVM application chain.
Solana Lisk Example
Perp DEXs: Perp DEXs like Hyperliquid can run as independent Layer 1 networks. In addition, for trading use cases, it is possible to customize the number of transactions per block, or implement conditional logic, such as integrating the execution of stop-loss orders directly into Layer 1, ensuring that it is enforced as a state transition, or introducing application-specific atomic logic.
AI and DePIN: These can have a controlled list of service providers, such as Pyth. For example, Akash operates as a computing marketplace through the Cosmos application chain.
Governance application chains: Sovereign governance application chains can be very attractive, as evidenced by MakerDAO’s interest in the SVM application chain. Crypto governance is still evolving, and having dedicated chain forks can be a useful coordination mechanism.
Future enterprise application chains: Potential applications include funds, such as BlackRock, or payment systems, such as Visa or CBDC.
· Game Application Chain: A casino game project running on Solana is considering its application chain.
· Forking Solana for modifications: Similar to the optimized EVM (parallelization) provided by Monad or Sei, someone could build a more optimized version of Solana. This trend may become more common in the coming years as the Solana mainnet begins to explore new design architectures.
Envisioning the Solana Application Chain Stack
While building an application chain may be relatively simple, ensuring connectivity between all application chains is critical for interoperability. Drawing inspiration from Avalanche subnets, which connect via native Avalanche Warp Messaging, and Cosmos application chains, which connect via IBC, Solana can also create a native messaging framework to connect these application chains.
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A middleware platform similar to Cosmos-SDK can be built to provide a one-stop service to create application chains with built-in support for oracles such as Pyth or Switchboard, remote procedure calls, RPCs such as Helius, and messaging connections such as Wormhole.
Polygon's AggLayer provides an innovative solution that allows developers to link different Layer 1 or Layer 2 into the AggLayer to achieve cross-chain ZK proof aggregation.
What is the positive impact of application chains on the Solana ecosystem?
Lisks do not pay fees in SOL or use SOL as a transaction fee token, so they do not contribute value to SOL directly, except for SOL re-staking for economic security purposes, but their benefits to the SVM ecosystem are clear. Just as the network effect of the EVM, more SVM forks and Lisks will strengthen the network effect of the SVM. This logic also applies even if Eclipse, as a Layer 2 extension of the SVM on Ethereum, competes with the Solana mainnet.
Solana Layer 2
Solana Layer 2, or Rollup, is a logically independent chain that publishes data to the Data Availability (DA) layer of its main chain and reuses the main chain's consensus mechanism. They can also use other DA layers like Celestia, but this is no longer a true rollup. The term "RollApp" is usually used for application-specific Rollups (which most Solana applications are exploring).
Will Solana’s Rollup be like Ethereum?
Obviously not. For Solana, Rollup will be mostly abstracted for end users. From an ideological point of view, Ethereum's Rollup is top-down, that is, the Ethereum Foundation and leaders decided that the best way to scale was through Rollup, and then began to support various Layer 2 after the CryptoKitties incident. At Solana, demand comes from the bottom up, from app developers with significant user adoption. As a result, most current roll-up plays are marketing plays that are more narrative-driven than user-need driven. This is a significant difference that could lead to a different future for Rollup than Ethereum.
Is compression equivalent to Rollup?
Layer 2 scales the base layer blockchain (Layer 1) by executing transactions on Layer 2, batching transaction data, and compressing them. The compressed data is then sent to Layer 1 and used for fraud proofs (optimistic rollup) or validity proofs (zk rollup). This proof process is called "settlement". Similarly, compression offloads transactions from the mainnet, reducing contention for the base layer state. Notably, Grass Layer 2 will utilize state compression for its rollup.
Rollup landscape on Solana:
There are currently two projects similar to Rollapps running:
GetCode
It is a payments app with a micropayment SDK that allows anyone to instantly make and accept payments and uses a rollup-like structure for their app. It creates intents for all transactions and uses a rollup-like sequencer that settles on Solana every N intervals.
Using a rollup-like structure, we can achieve:
Flexibility: Intents can represent a variety of future activities, not just payment transactions. Additionally, Solana as a chain can be replaced if necessary.
Instant and Private: Due to the soft finality of the sorter, payments are instant even during Solana congestion. While transactions are visible on-chain, the exact amounts and intent remain obscure, ensuring user privacy.
MagicBlocks’ Ephemeral Rollup
MagicBlocks is a web3 gaming infrastructure that has developed Ephermal Rollup, specifically for gaming. It uses the account structure of SVM to split the game state into clusters. The state is then temporarily transferred to an auxiliary layer or "ephermal rollup", a configurable dedicated layer. The ephemeral rollup runs as a dedicated SVM runtime or rollup to process transactions at a higher throughput.
Using a rollup-like structure, we can achieve:
Customization of specialized runtimes, including gas-free transactions, faster block times, and integrated timing mechanisms, e.g., integrated transaction scheduling systems like Clockwork that run without fees.
Developers can deploy programs to the base layer, such as Solana, instead of on a separate chain or rollup. Ephemeral Rollups do not fragment the existing ecosystem, allowing for the acceleration of targeted operations without creating isolated environments. This means that all existing Solana infrastructure can be leveraged.
This approach helps create a highly scalable system that is able to spin up rollups on demand and auto-scale horizontally to accommodate users performing millions of transactions without the typical trade-offs of a traditional Layer 2. While MagicBlock focuses on gaming, this approach can also be applied to other areas such as payments.
Solana Rollup coming soon:
· Grass: Grass is a DePIN project that focuses on solving the data needs of artificial intelligence through verification and crawling technology. The project crawls AI training data through Grass nodes on the network, and stores this data on the blockchain by validators, while accurately recording the source of the data and the nodes that perform the crawling, and giving rewards accordingly.
Given that Grass needs to handle up to 1 million network requests per second, this is unrealistic for the Solana mainnet. Therefore, the project plans to use zero-knowledge proof technology to verify the data set and batch settle on Solana's Layer 1.
The Grass team is also considering introducing state compression technology from other clusters and anchoring data on the beta version of the Solana mainnet. This innovation will make Grass a foundational platform that supports a wide range of applications that can only be built on it.
*Note that projects building platforms and infrastructure usually have higher market valuations. Grass is also about to launch its token.
Zeta: One of the earliest perpetual contract exchanges on Solana, it has a fully on-chain perpetual order book and is currently planning to migrate its trade matching process off-chain using Solana’s Rollup technology.
Perpetual contract exchanges using Rollup technology have obvious advantages because it greatly improves the user trading experience. You can ask those who have traded on platforms such as Hyperliquid or Aevo with perpetual contract exchanges on Solana, which require users to sign each transaction, the wallet pops up, and wait for about 10 to 20 seconds. In addition, perpetual contract transactions do not need to be executed synchronously and can be highly integrated with other parts of the DeFi ecosystem, especially in terms of transaction matching.
Interestingly, Armani, co-founder of Backpack also tweeted that they are now focusing on Layer 2 solutions.
Sonic is developing a modular SVM chain called Hypergrid, which allows game developers to deploy their own chains on the Solana platform. At the same time, there are Ethereum Rollup projects based on SVM technology, such as Eclipse and NitroVM, which use SVM as their execution engine. In the Solana ecosystem, Neon serves as a Layer 2 solution compatible with EVM. In addition, some innovative projects such as Molecule, an SVM Layer 2 for Bitcoin, are still in the early conceptual stage.
Sovereign SDK provides a node.js-like framework specifically for building Rollups. Users can submit their Rust code, and the platform is able to convert it into Optimistic Rollup or ZK Rollup that supports deployment on any blockchain. These Rust codes can be customized application logic or the implementation of any virtual machine.
Some arguments about Rollup
Rollup = consistency with SOL
“ETH-Aligned”, Ethereum consistency, or “ETH Bag Biases”, Ethereum bag bias, has become a popular Internet meme.
Why are Layer 2 and Restaking/EigenLayer the hottest topics?
This is because they increase the “moneyness” of ETH, which is used as a core asset everywhere.
The same principle applies to Solana. The Solana community will support any solution that increases their SOL holdings - it's that simple. As the Solana ecosystem expands, the once-overlooked "monetary nature" of SOL will become important. Remember, most Rollups are "marketing gimmicks" anyway, and since the market still values infrastructure over applications, they provide better token value accumulation.
Rollups will feel like an extension of Solana
In addition to the benefit of security, which is inherited from the base layer, easy access to Solana users and assets will be a significant advantage. As Jon Charbonneau pointed out, Ethereum Rollups like Base, Optimism, and Arbitrum feel more like an extension of Ethereum. Users keep the same wallets and addresses, the native gas token is a single, standard version of ETH, ETH dominates DeFi, all trading pairs are ETH, social applications price NFTs in ETH and pay creators, for example, friend.tech, and deposits on Layer 2 are instant, etc.
The same will happen on Solana. Learning from Ethereum, most Solana Rollapps will not make users feel like they are using a separate chain, for example, Getcode.
Solana will see more “RollApps” instead of “Rollups”
Solana does not have scaling issues like Ethereum, where the mainnet has become difficult to use due to high gas fees, it is highly optimized. However, some applications that require dedicated block space will create their Rollups. Although a general purpose Rollup on Solana does not make sense to me, it does make sense for projects economically. For example, Base users generated $2 million in revenue for Coinbase in just one day! The incentives for builders are heavily tilted towards Layer 2 . However, as observed, every EVM Rollup seems to be a normal Rollup, and many projects like Linea, Scroll, or zkSync have become ghost chains with only farmers doing a few transactions for token airdrops.
Additionally, I feel like a general purpose Layer 2 on Solana could lead to the same old problems as Ethereum, namely centralized Rollups, congestion, and liquidity fragmentation.
Why do some applications want to migrate to Rollapps/AppChains?
Each application will initially launch on the Solana mainnet, as hosting more applications on shared infrastructure significantly reduces complexity for developers and users. However, as these applications grow, they may seek to:
Value capture. It is more challenging to internalize value on a shared Solana layer that is not designed for just one application. MEV capture could be another lucrative option for DEXs.
Dedicated block space.
Customizability in use cases. For example, in terms of privacy, Getcode uses sequencers to provide private payments to its users, market fee experiments, encrypted memory pools to minimize MEV, and customized order books.
However, not all applications will want to launch their own Rollup, especially those that have not reached a certain escape velocity, e.g., sufficient TVL, users, transaction volume. Launching your own chain today involves painful and unnecessary trade-offs, complexity, cost, worse user experience, liquidity fragmentation, etc. Most applications, especially those in the early stages, cannot justify these trade-offs for incremental gains. Solana remains the heart and soul of SVM development, so many new applications may be deployed.
For App Builders
Solana Mainnet or Lisk or Rollup depends entirely on the different situations. If there is no strong need for composability with other applications, it makes perfect sense to put some different components off-chain, whether it is Lisk or Rollup. Users don’t even need to know that they are using a Rollup or Lisk. Grass, Zeta, and Getcode all abstract away any Rollup-type infrastructure they use for their users.
For use cases that require authorization and customization, Token Extension can also meet most requirements, such as KYC or transfer logic, while maintaining composability.
Infrastructure that drives Rollup and application chains
If the Rollapp/AppChain theory is expanded, existing infrastructure providers will be able to benefit greatly as they will enter new markets:
Existing Rollup-as-a-Service (RaaS) providers, like Caldera, can easily enter the SVM market as demand emerges. SVM Ethereum Rollups like Eclipse and NitroVM are also closely watching this opportunity. Additionally, Sovereign Labs offers a Sovereign SDK Solana Adapter that is able to support Rollups on Solana (not yet production ready). Helius is another company that is well suited to build infrastructure for Solana Layer 2, as Mert has hinted at multiple times.
Shared sequencers like Rome Protocol and the need for light clients like Tinydancer. Shared sequencers can be interesting for Rollups because they enable activities like atomic arbitrage, MEV, and seamless bridging, reducing the fragmentation of liquidity.
Wallets like Phantom, Backpack, and Solflare. Multi-signature and smart contract wallet infrastructure like Squads. Squads has been positioned as “the ultimate smart contract wallet infrastructure layer for Solana and SVM.”
Re-staking SOL: Modularity theory also promotes re-staking, as these Rollups/appchains may need SOL to share security and be more aligned with Solana. This will bring income to early participants like Cambrian, Picaso and Solayer, Jito through Stakenet and LST like Sanctum, and validators.
Finally, can Solana cope with global demand?
Of course not. Realistically, even given Moore’s Law, even if hardware continues to improve in performance, and Solana is optimized for this hardware progress, this is impractical. I believe that all less critical transactions, like DRiP sending NFTs, will eventually move to their own chain, while the most valuable transactions will stay on the main chain where true composability is critical, such as spot DEXs.
This doesn’t mean Solana loses the battle of monolith vs composability; it will manage better than other chains in situations where it relies on composability and low latency. And Sui, Aptos, Sei, Monad, etc. are no better because we don’t yet know if they can withstand the test of high real user activity.
Unlike Ethereum, the Solana mainnet is not intended to be a "B2B chain"; it has always been and always will be a consumer chain. Building distributed systems at scale is extremely challenging, and Solana has the best potential to become the shared ledger for the world's most valuable transactions.
Solana Needs a Soulmate: Are AppChains and Rollups the Perfect Match?
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