Solana (SOL) Is Truly In Limbo If This Happens, Warns Crypto Analyst

A recent statement made by Austin Federa, a strategist at the Solana Foundation, has sparked a widespread debate within the crypto community. On Monday, Federa proposed a novel conceptualization for several enhancements on the Solana blockchain via a post on X, suggesting that most of the L2-ish things on Solana are better thought of as Network Extensions.

While the underlying tech stack might resemble Bitcoin or Ethereum L2s, the function and role is so radically different I think founders would best be served by Network Extensions. Network Extensions extend the Solana network to new places, or bring new execution environments, specialized processing, etc to the Solana network. State Compression, cNFTs, Neons EVM layer, maybe even Phoenix all fit this mental framing imo, Federa wrote.

Why This Could Put Solana In Limbo

Responding to this post, Ignas, a popular crypto analyst and co-founder of Pinky Brains, voiced his analysis and concerns to his 105,000 followers on X. Ignas highlights the critical nature of the ongoing debate about Solanas developmental strategy. He raises a fundamental question about whether the crypto community will embrace the new Network extension terminology or continue to favor the Layer 2 framing.

Ignas elaborates on the potential risks associated with Solanas rebranding of its scalability solutions as Network Extensions. He cautions that if Solanas transition leads to negative outcomes similar to those experienced by Ethereumsuch as liquidity fragmentation and a degraded user experience due to the complexities of bridging between layersthen the future of SOL could be jeopardized, leaving it in a state of limbo.

ETH was stuck between BTC and SOL during this bull run. BTC was better money for less conservative and institutional investors, and SOL as a faster, simpler, and cheaper smart contract platform with higher upside than ETH. If Solana narrative shifts from a monolithic model to scaling with L2s (like Ethereum), SOL could become the new ETH. [..] then SOL is truly in limbo, Ignas warns.

The impact on the Solana price could be significant. According to Ignas, Ethereum would remain the safer option for long-term investors because of its higher decentralization and no downtimes. Plus, if degens start chasing network extension tokens for SOL beta instead of buying SOL, it could stagnate SOLs price growth, the analyst added.

Meanwhile, Ignas did not dismiss the potential advantages of Solanas strategy entirely. He acknowledged that integrating Network Extensions from the outset, with aggregation layer solutions already in placea step Ethereum had not taken during its initial Layer 2 rolloutscould mitigate some of the common challenges associated with Layer 2 solutions.

This proactive integration could preserve a unified user experience and prevent the fragmentation of liquidity. As a result, Solana could maintain the monolithic narrative while benefiting from modular approach solutions. The network extension narrative could then prevail, Ignas concludes.

However, if the Solana narrative shifts to L2s, there could be an empty void for a new monolithic champion. The crypto analyst concluded: Solanas shift to a modular scaling approach creates an opportunity for a new monolithic scaling champion in the eyes of crypto community. Could this be the perfect moment for Monad to launch? Or will another Layer 1 blockchain seize the monolithic chain crown from Solana? Exciting!

At press time, SOL traded at $134.

Text source: NewsBTC

Solana