After the carnival of public chains such as Solana, where will Ethereum and Layer 2 go?

Author: Haotian

Recently, Solana led Avalanche, NEAR and other layer1 public chains to kill all sides, and the market has heard the sound of killing Ethereum. Indeed, ETH Killer is the trump card narrative held by most public chains in the last Bull Market.

However, at a time when EVM dominates the rivers and lakes and layer2 has not yet exploded, narratives such as MEME and DePin alone are not enough to shake the market position of ETH. This is just a short orgy of Alt-Layer 1 before the Cancun upgrade, Why?

1. The narrative of major public chains competing to kill Ethereum has been fully verified by a round of bull and bear cycles “failed”. On the surface, this stems from Ethereum’s strong market Consensus, the innovative power of the developer community, and the magic of unlimited combinations of Decentralized Finance and Non-fungible Token financial applications.

In fact, because the Crypto market is still limited by technology, market, compliance and other factors, it has not achieved the large-scale popularization of Mass Adoption, and the technological “jump” brought by these new public chains has not become the starting point for stimulating new narratives and expanding the increment of new markets, and is only eating the overflow dividend of Ethereum.

Public chains such as Solana, Avalanche, and Aptos want to completely improve the technical level from the underlying frameworks such as development language, code complexity, and operation mechanism, so as to provide better infra for the application market. For example, Solana’s high concurrent processing performance and user experience UX advantages make the technology more suitable for the future incremental crypto market.

It’s just that the basic operating logic of the market has not really changed.

Risk-averse investors, market audiences thirsty for wealth passwords, constantly refreshing diverse gameplay, always existing interest spreads, occasional overflow of the circle of rich stories, etc., these perfectly constitute the basic elements of a cyclical Bull Market.

This makes Ethereum, which is “congenitally limited” in technology, stunned to rely on various EIPs, ERC standard protocols and other seams to make up for it, which is enough to derive a huge application market, and can also allow other competing public chains to frequently emerge only by spillover effects.

But everyone is eating EthereumDecentralized Finance market dividends, and it is not yet time for Alt-layer1 to easily replace and surpass Ethereum.

2. Ethereum “congenital defects” have explored a set of mature solutions, such as the expansion problem, which has evolved into various solutions such as Rollup, Plasma, and Validium ERC4337 Address;

In addition, layer2 has also become a narrative track, with OP-Rollup and ZK-Rollup continuing tug-of-war; followed by the upgraded Blob space in Cancun and more distant Sharding Sharding and underlying SNARK to provide follow-up development support;

Even the potential DA capacity limitation of the upper limit of block size extends to Eigenlayer and other restaking-based solutions to optimize DA, and then modularly combine third-party DA solutions such as Celestia, as well as optional alternatives to the VM execution layer.

The development, scaling, and extension environment of Ethereum as a whole is mature and prosperous enough. The developer power behind it is the cornerstone of the ETH.

Although the landing results of Ethereum’s continuous stacking Lego construction ecology in the past few years are indeed less than expected, the potential possibilities of Ethereum can not be underestimated if it can complete the key upgrade from POW to POS under frequent hacking attacks, and can gather developer resources on the main line centered on Ethereum EVM, and can evolve a more ambitious layer2 narrative plate.

Believing in Ethereum is the awe of Ethereum’s stable consensus for many years, and it is also the respect for the huge developer group behind it, Builder.

I vaguely remember that at the end of 18 years, EOS was known as a new paradigm public chain, and set off a round of spinach game frenzy, but everyone saw the fact that after the short prosperity dissipated, the slow but steady Ethereum finally had the last laugh.

The real value discovery must be captured slowly.

3. The build speed of Layer 2 in the Bear Market is indeed slow, especially without a round of market gifts from layer 2 Summer, which makes everyone involved in the construction of the layer 2 ecosystem a little unwilling.

However, the slow speed of layer2 build is similar to the fact that the EthereumDecentralized Finance narrative spills over to the major cutting-edge public chains. The second half of Ethereum layer2 is driven by some high-frequency transactions and applications, relying solely on the spillover effect and path dependence of Ethereum’s financial gameplay, and Alt-layer1 has no advantage.

On the one hand, OP-Rollups such as Arbitrum and Optimism have the advantages of layer2 first-mover ecology, and expand the market territory under the Stack strategy, but these strategic expansions belong to the B-end layout, and OP-Rollups need to solve the criticized centralization problem and drive the growth of the C-end market.

On the other hand, ZK-Rollups such as zkSync and Starknet have more advanced technical advantages, but ZK is also a future-oriented technology, and the existing user scale cannot fully show the strength of ZK. Only when the number of users expands, the gas can be negligibly low and the experience will be smoother, which is the final form of ZK layer2.

In addition, the waist and tail forces of the layer2 market are doing things, such as Metis, trying to use Hyper (OP + ZK) Rollup technology, doing POS Decentralization Sequencer, changing the incentive method of Token (governance - > utility) and so on. In addition, shared Sequencer solutions such as Espresso and Astria are also expanding the potential of the layer2 market in the form of Rollup as a Service.

Don’t think that OP + ZK has already finished telling the story of layer2, in my opinion, Layer2 War has really begun, and the real involuted layer2 market Cancun may only open the situation after upgrading. When the upgrade time in Cancun is finalized, isn’t the rise of Layer 2 against the trend an emotional release of the current aggrieved situation of Layer 2?

When the future application chain narrative scene is opened and the situation of Mass Option is opened, the funds, users and DApp applications that can be deposited in the layer2 track will be more stable than other Alt-layer1.

4. Of course, speaking out for the Ethereum ecosystem at this moment is not a denial of Solana’s market potential. It is undeniable that Solana’s technological innovation starting point is indeed higher than the existing Blockchain architecture, whether it is its storage and computing separation characteristics and high concurrent transaction processing characteristics, which make it user-friendly and easier to build an ecosystem.

Take DePin as an example, physical infrastructure + Token incentives, which is a narrative that has been repeated in the vortex of failure in the past, such as FIL Arweave. Whether it will be really successful on Solana, I don’t know, but DePin happens on Solana and I have a little more confidence in DePin. After all, the technical starting point of high concurrency is naturally in line with Web2, which is not the same as the ecological logic of merging by module combination.

Solana’s current rise is, on the one hand, a window opportunity brought about by the temporary silence of Ethereum’s layer2, and on the other hand, it is the result of a group of development forces already active on Solana. But what needs to be corrected is that Solana’s goal is not to kill Ethereum, it is actually looking for Ethereum’s “blank” point to wait for an opportunity to break through, if there are achievements and there is an ecological equivalent matched with Ethereum, at most it is just a comparison, how to replace it.

Ethereum will inevitably be hit by some new technical starting point of the Alt-layer1 chain, but they are not Ethereum “killers”, I prefer to call them, web3 game-breaking innovators.

Ethereum has been successful in Decentralized Finance financial applications and a huge combinatorial ecosystem, and the new journey of layer 2 and layer 3 is still on the way.

If it is “open, inclusive, credible, and combined”, such Ethereum will not achieve the value of the Blockchain in the end, and it is hard for me to believe that a new chain will.