Solana can’t be ‘global backbone’ of blockchain, Ethereum community member says

According to Ethereum community member Ryan Berckmans, Solana cannot serve as the backbone of the so-called “new” global financial system.

Solana (SOL) has transitioned from its initial “monolithic” approach to recognizing the importance of Layer 2 solutions. But Berckmans points out that on X, Solana initially marketed itself as having the capacity to handle global transactions on a single chain. This was before we rebranded L2 solutions as “Network Extensions” rather than recognizing them as L2.

Solana’s gradual acceptance of Ethereum’s (ETH) L2 backbone strategy comes after seeing flagship applications building private L2 application chains on their networks.

This shift in perspective became even more evident as a large Solana development team moved towards building an SVM L2 on Ethereum.

There will be a single global backbone – Ethereum

Ethereum is the backbone of the new global financial system of L2s and L1 applications. No other chain comes close.

Mert suggested that Sol could become the backbone. But Solana will never be the backbone. Here are 5 reasons why.

Four… pic.twitter.com/RoyEkASRP5

— Ryan Berckmans ryanb.eth (@ryanberckmans) 26 October 2024

There are various obstacles in front of Solana

Berckmans, who spent eight months as a senior engineer at Project Augur, a prediction platform on the Ethereum blockchain, identifies obstacles preventing Solana from becoming a global backbone.

First, Solana only works with one production customer (agave rust). A global backbone requires at least three independent chain customers with a balanced share distribution, he says.

The development of their second customer, Firedancer, is experiencing major delays due to the lack of a suitable protocol specification and research community.

Solana’s high bandwidth requirements, which recommend 10 Gbps uploads, create major centralization risks and practical limitations.

This requirement particularly challenges the concept of a global backbone that can operate anywhere.

The platform’s outage history and lack of protocol-level fallback features create additional risks.

Berckmans noted that unlike Ethereum, Solana lacks the ability to continue producing blocks when finalization issues arise.

According to Berckmans, economic centralization raises another important concern. With approximately 98% insider allocation from its initial coin offering, compared to Ethereum’s 80% public offering, Solana faces questions about true decentralization.

The emergence of the zk evidence set for the L2 solution further challenges Solana’s position. While Solana focuses on L1 execution scaling, this approach conflicts with global backbone requirements.

Going forward, Berckmans predicts that Solana’s year-over-year market share will continue to decline compared to Ethereum’s combined L1 and L2 ecosystem. He notes that major companies such as Coinbase, Kraken, Sony, and Visa have chosen Ethereum L2 solutions as evidence of the direction of the market.

The analysis concludes that while Solana has shown strength in areas such as meme coin growth and price appreciation, its fundamental limitations prevent it from serving as the backbone of the global financial system.