- Solana’s architecture bypasses L2 issues with efficient execution and data layers.
- Yakovenko believes multiple L2s are redundant and one L2 can handle all use cases.
- Ethereum’s L2 growth causes concerns about network fragmentation and base-layer revenue.
Solana’s co-founder Anatoly Yakovenko has once again raised concerns about the growth of Layer-2 (L2) rollups, pointing out that Layer-1 (L1) solutions like Solana already provide efficient and cost-effective scaling capabilities.
Yakovenko pointed out that L2 solutions require complex fraud proofs and multi-signature updates, something Solana’s architecture avoids through its separate execution and data layers. According to him, these features allow Solana to bypass the common issues L2s face, such as the reliance on L1s for scalability.
Yakovenko also voiced doubts regarding the limited data production of L1s, such as Solana, calling its annual data output of 80 terabytes “measly.” He warned against creating redundant L2s, urging developers to consider launching a token if they believe their platform could fulfill existing demands.
Solana Competes with Ethereum’s Layer-2 Solutions
Yakovenko further clarified that Solana competes directly with all Ethereum L2 solutions rather than Ethereum itself. While there are many Ethereum L2s, Yakovenko believes that only one L2 should be enough to meet all needs as long as it can handle parallel execution.
Yakovenko noted that:
“There is no point to multiple L2s…if a single L2 can handle parallel execution, it can use up all the blobspace and run every use case.”
His views align with the notion that most smart contracts have similar functions and that too many L2s are redundant.
Ethereum’s Strategy and L2 Expansion
In contrast, Ethereum co-founder Joseph Lubin endorsed the growth of Ethereum’s L2 solutions. At the Digital Asset Summit, Lubin discussed the achievements of Ethereum L2 projects such as Linea, which ConsenSys developed.
However, there is a question about Ethereum’s ongoing strategy. An upgrade in March 2024 reduced transaction fees on Ethereum’s base layer by 95%. While it spurred the growth of Ethereum’s L2s, the move led to Ethereum’s base layer revenue falling by 99% by the year’s end. On Ethereum, the rise of more than 140 scaling solutions and 60 roll-up networks has led to concerns about whether the network would split and the ability to capture value.
Market Developments and Ethereum’s Price Movement
Ethereum’s price recently saw an uptick, trading at $2,076.46, reflecting a 3.87% increase during the time of writing. This increase coincided with a surge in trading volume, which rose by 87.66%, reaching $13.36 billion.
ETH has remained above a key support level as a number of ETH addresses now hold ETH inside a key range between $1,886-$1,944. Furthermore, the movement of Ethereum from the centralized exchanges has also grown. In the 48 days that have passed, 1.2 million ETH was moved out of exchanges which could mean something in how the market will behave in the future.
Ethereum’s prospects are still looking good, as technical indicators like the MACD show bullish momentum. At the moment, the RSI is inside the neutral zone, which is a signal for price growth.
