Delphi Research believes that the public blockchain Solana may become one of the most valuable human inventions in the future, on par with Ethereum and Bitcoin. This article is sourced from Teng Yan’s research report, compiled, organized, and written by Foresight News.
Introduction:
Solana experiences another network failure, with no blocks produced for over an hour.
Background:
Why did Solana have a comeback?
Table of Contents:
Our time is running out.
Two philosophies.
Key questions.
I have been contemplating the debate between Ethereum and Solana, which is a hot topic in the cryptocurrency field. I do not intend to delve into their technical differences here, as there have already been many in-depth analyses in the industry, such as Syncracy Capital’s paper on Solana, which I highly recommend reading. Instead, I would like to provide my personal perspective on the direction of our industry’s development. I believe that Solana may become one of the most valuable human inventions in the future, on par with Ethereum and Bitcoin.
Our time is running out.
Cryptocurrencies have been in existence for over 10 years. They have attracted billions of dollars in investments and have become a magnet for the smartest talents. We may be one of the industries with the highest concentration of talent, apart from artificial intelligence. However, we have yet to discover that elusive killer use case that people cannot live without, that would cause immense pain if taken away. In such a scenario, it would be impossible for governments to shut down cryptocurrencies. We urgently need the “ChatGPT moment” for cryptocurrencies. ChatGPT is the fastest application to reach 100 million users in the shortest time, taking only 2 months. As time passes, the pressure is increasing. Although cryptocurrencies currently have some political and social support, these sentiments will fade over time if no impactful results are produced. We are at a crossroads, and the next few years will determine whether cryptocurrencies will become a critical, world-changing technology. We cannot wait any longer; the time has to be now. To achieve a killer application, the infrastructure layer must be prepared.
Two philosophies.
Ethereum and Solana adopt two different philosophies but aim for the same ultimate state. Solana’s philosophy is to first build a useful blockchain and then gradually achieve decentralization and censorship resistance over time. It is designed for high performance and aims to become the best execution layer. Key points about Solana include:
– Low fees, low latency, high throughput.
– Optimization for atomic composability, considered the most useful feature of a blockchain.
– Improved user experience compared to EVM (e.g., no token approval required).
– Solana scales with hardware advancements, leveraging Moore’s Law that has been effective for decades.
– After 3 years of battle-tested experience, tools and partnerships are in place. Toly succinctly summarizes his vision here:
On the other hand, Ethereum’s philosophy is to first establish a decentralized and censorship-resistant blockchain and then gradually improve its usability over time. This gives ETH currency a premium. Ethereum’s future development plans (Surge, Verge, Purge, Splurge) focus on enhancing its scalability. It is a journey that will unfold over several years, not immediately. Currently, transaction costs are high, and throughput is low. The well-known Trilemma of blockchain indicates that achieving optimal scalability, security, and decentralization simultaneously in a single blockchain is extremely difficult. The model suggests that focusing on improving any two of these areas often compromises the third. There is no perfect blockchain; trade-offs are necessary. Most debates between Solana and Ethereum revolve around the nature and degree of these trade-offs. The key question is how to strike a balance: how much decentralization should be sacrificed for scalability, or whether security should be the top priority, even at the cost of performance and fees.
Key questions.
We need to figure out what builders, entrepreneurs, and society truly want from blockchain technology. Decentralization is not a binary concept; it is a spectrum. Some use cases require more decentralization, while others do not. Currency and finance: yes, it requires assurance that I control my assets and that no entity can take them away from me. Otherwise, I would choose a bank. But games? Social media? By achieving greater user ownership and adjusting incentive mechanisms, improvements can be made to existing platforms without the need for complete decentralization. Considering this, here is my current mental model for the future of blockchain:
– Power Law: A few (<5) general-purpose chains will dominate most attention. - Multiple chains will exist, many with specialized use cases, and application-specific chains will be ubiquitous. - There is no one-size-fits-all solution. Ethereum and Solana will coexist. Both have the potential to thrive and become massive technology platforms. However, I find myself leaning towards Solana's philosophy, despite its flaws such as weak censorship resistance, fee market, and urgent need for lightweight clients. This is because Solana is now ready to support large-scale consumer applications, for example, compressing NFTs can only be done on Solana. We need to find the ChatGPT moment for cryptocurrencies, and we need it now, not in another 5-10 years. Solana may be the best choice to achieve this goal. Related Reports: - Is Solana's "Dogcoin" more profitable? Calculate the true profits using the Kelly formula. - Pre-order tutorial: Ambushing Solana Saga's second-generation mobile phone "airdrop blitz", historical empowerment, potential collaboration projects in one go. - In-depth analysis of Solana's largest airdrop: Jupiter's product and token valuation.