@ryanberckmans
Ethereum investors
Ethereum is the backbone of the new global financial system, including second-layer (L2) and first-layer (L1) applications. No other blockchain comes close to this level.
Mert suggested that Sol (Solana) could transform into this backbone. But Solana will never become this backbone. Here are five reasons.
Four years ago, Ethereum transitioned to focus on becoming the backbone of a new global financial system, primarily supporting second-layer and first-layer applications. Ethereum's backbone strategy is increasingly recognized as a top-tier first-layer strategy, a brilliant decision—though still in early stages, if you look closely, you will see some signs, such as imitation being the sincerest form of flattery, and second layers are dominating.
Solana has performed well this year in decentralized finance and meme tokens, and the price of SOL has also increased. However, I believe Solana's leadership has begun to realize that second layers could encroach on the market share of other first-layer chains. They now seem to imply that Solana could also transition into a backbone similar to Ethereum.
However, Solana is fundamentally unsuitable to serve as a backbone for second layer or globally scaled first layer activities. I will explain the reasons in detail.
First, let's explore how Solana's leadership seems to gradually acknowledge that Ethereum's second-layer backbone strategy is excellent and that Solana may need to transform into a backbone.
Initially, Solana claimed they would be so fast and so low-cost that the whole world would use this single chain Solana. This was their 'monolithic' era, a term they promoted until it became unfavorable (because, in reality, no single monolith can serve the entire world). Later, they shifted their marketing to using the term 'integrated'.
Then, in mid-year, Solana recognized that second layers are the right direction. Several things prompted this shift. Solana's leadership noticed that some of their flagship applications began building custom second-layer application chains on Sol—this is due to the common reasons users prefer second layers (i.e., control and customization while still being part of a larger whole without having to run consensus themselves). Earlier this year, a prominent Sol community member wrote a radical post about Sol needing to adopt second layers—at that time, the Sol community criticized this person because it was proposed before their leadership acknowledged that second layers were inevitable. Additionally, a major Sol development team also transitioned/expanded to building SVM second layers on Ethereum (shifting from Sol first-layer applications to Ethereum second layers). As a result, Solana's leadership began to value second layers.
(Note that Solana has not acknowledged that Ethereum's view on second layers has always been right; instead, they claim their second layer is not a second layer, but 'network expansion.' This is quite a marketing gimmick. It is similar to the recent concept of 'real tps' that Sol had to invent to counter the widespread misreporting of Sol's tps on many informational sites for years, which included consensus overhead of up to 80%. Many sites still show Sol's tps as 3000, but in reality, it is about 750 tps. Their new 'real tps' was invented to offset the 'false tps' they have long reported. My point is that those seriously conducting on-chain investment due diligence should carefully scrutinize Solana's claims—many do not hold up to scrutiny.)
Fast forward to this month, Solana's leadership is now starting to talk about how to simply shift to Ethereum's backbone strategy (but they cannot achieve it, for the reasons below).
Why is Solana now starting to lean towards Ethereum's backbone strategy? Why now?
This is because it has finally become obvious that the world needs many, many new chains (thousands, then tens of thousands), and second layers typically have an advantage over other first-layer chains (which is why Coinbase, Kraken, Sony, EVE Online, etc., choose second layers), so becoming a second-layer backbone is a top-tier strategy.
So can Solana simply transition to a backbone? No, this strategy is unfeasible for Solana (for the reasons below).
In fact, Solana faces profound dilemmas in both technical and economic strategies.
What specific dilemmas does Solana face?
Solana will neither be fast enough nor cheap enough to meet even a small portion of the upcoming demands of the future world.
Solana is not decentralized enough to attract real whale capital.
Solana cannot become a global backbone for second layers.
Solana bundles consensus and execution together, which is slower and more expensive than just execution alone. This is why the most scalable second layer—executing without requiring consensus, while benefiting from the trustless composability network effects among all second layers—will soon be faster and cheaper than Solana. See MegaETH.
Reiterating this point because it is crucial: Solana cannot only not become a backbone, but soon it won't even be the fastest or cheapest chain.
Currently, for some (including many investors), Solana seems like the best chain—better than Ethereum. But the reality is far from that. Soon, Solana will no longer be a leader in any aspect at the technical/economic level.
Since this season, Ethereum may have lost in the ratio battle against BTC and SOL (the season is not over yet), but Ethereum has been playing chess, not checkers. Ethereum is gradually winning this 'war' of capturing on-chain growth and global adoption because Ethereum scales in a globally practical manner—through a first-layer backbone and second-layer markets.
In short, Ethereum's view of the backbone strategy has been the most correct from the beginning. However, even though Solana's leadership may imply they can become a backbone, they cannot. (Here are the reasons.)
Five reasons why Solana can never become a global backbone
1) Solana lacks true client diversity and may never achieve it on a meaningful timeline.
Client diversity means that your chain runs on multiple independent programs in parallel. This helps prevent attacks (multiple independent development teams and programming languages) and accidents (multiple codebases, as bugs are usually confined to a single codebase).
Client diversity is essential for a global backbone.
To achieve client diversity, no single program can run the majority of your validator stake. This requires at least three independent chain clients and maintaining a balanced stake among them. It also requires a PDF protocol specification and research community upstream of the chain clients. The protocol specification determines the 'definition' of the chain and the correctness/reliability of that definition. This ensures that all clients are moving towards the same strictly defined goal.
Today, Sol has only one production client (agave rust). Sol is trying to build a second client (firedancer), but due to their lack of a real protocol specification or research community, and because the agave rust client is highly optimized and heavily depends on underlying hardware, extracting the underlying design into a PDF protocol specification and then re-implementing it in a new client becomes increasingly challenging, resulting in very slow and delayed progress.
Firedancer is still far from ready to run 50% of the stake in production with its complete codebase. My view is that this may take years rather than months.
Even if Solana has firedancer enter the production stage, they still have not achieved client diversity. To achieve this, they need at least a third production client (so that no client has more than 50% of the stake, which is impossible with only two clients) and maintain a balanced stake among them, ensuring that all three clients have 100% original codebases with no code overlap, no development team overlap, no code dependencies/library overlap, and are written in completely different programming languages.
Ethereum has already had four production chain clients that meet these standards for many years.
2) The second reason why Solana will never become a global backbone is that its chain requires very high bandwidth (recommended 10Gbps upload). This significantly increases real-world centralization and risk.
The whole meaning of a global backbone is to minimize all forms of risk, so imposing extremely high bandwidth requirements is impractical.
High bandwidth requirements are difficult to address. You can buy a big computer and transport it anywhere, but in many regions, 10Gbps upload speeds are not available, especially in areas that could be captured by company data centers or VPNs.
A backbone must be able to run almost anywhere. Even completely avoiding data centers is a possible future option, and this threat is a key part of risk minimization.
Today, Sol recommends an upload bandwidth of 10Gbps, but over time, this requirement will only increase. For Solana, the bandwidth issue will not improve over time.
3) Solana faces a high risk of future shutdowns. Solana has previously experienced multiple outages.