Ethereum Co-Founder Says Solana is Unsustainable
Ethereum Co-Founder Joseph Lubin said Solana is ‘faking it until they make it.”
Covered:
- Ethereum co-founder critiques Solana economics
- Ethereum continues losing market share
Ethereum Co-Founder Critiques Solana Economics
Joseph Lubin, CEO of Consensys and formerly a co-founder of Ethereum had some choice words recently for rival blockchain Solana. In an interview with the Financial Times, Lubin criticized the model Solana uses to validate transactions. Because Solana fees are next to nothing, Lubin thinks the economic model of paying out validators “disproportionate rewards” is unsustainable.
He called these growing pains “natural” and said projects like Solana “either fake it until they make it, or they die.” This highlights a problem rarely talked about with “uber fast” blockchains, and that is the economics behind block production. Eventually, you can’t incentivize validators if the transaction fees are so negligible. Solana is forced to subsidize block production.
In regards to fixing the fee structure for block production in cheap, fast blockchains, some have opted out of validating incentives altogether to mitigate this problem. Algorand, as an example, pays no rewards for validators. Rather, the governance model is used as the main incentive program for the chain. As Ripple co-founder David Schwartz said in a 2020 Stanford talk about this exact issue: “the best incentive is no incentive.”
Solana has faced its fair share of bottlenecks outside of the issue Lubin posed. Numerous times the chain has gone done due to spam attacks, but this also has a direct relation to the fee structure. When there are no fees, it is easy to attack, or “spam” the networks with thousands of transactions. The latest downtime was in January, with the same attack vector.
Solana went down again at two o'clock in the morning (UTC+8) on January 4th. According to users of the official Telegram community, the attacker is suspected of using spam to conduct a DDoS attack.
— Wu Blockchain (@WuBlockchain) January 4, 2022
However, Solana hit back at Lubin’s comments, saying “looking at revenue doesn’t accurately predict the long-term performance of a blockchain’s economic model.” Clearly Lubin has a reason to go after Solana, they are in the spotlight, and they have more or less snubbed their nose at EVM compatibility.
Ethereum Continues Losing Market Share
One could also argue that no chain has sucked more fees (gas) out of the average user than Ethereum, something Solana and many chains have fixed, but with trade-offs. However, Ethereum gas fees have remarkably dropped to record lows. The issue with that is, while its good for users, it means less people are using the chain, which is bad for holders, and potentially TVL.
#Ethereum gas fees dropped to 50 cents ?? pic.twitter.com/FTLlu7hrwr
— Nick Odio (@crypt_odio) March 15, 2022
As you can see in the below graphic, Ethereum’s market share has gone from almost 100% dominance in 2020 to just above 54%, and it has been a downward trend the entire time. If it wasn’t for worldwide adoption of NFT’s on Ethereum, like Crypto Punks and Bored Apes, the market share would certainly be even lower than 50%.
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Text source: CryptosRus
