Delphi Research analysts believe that the public blockchain Solana may become one of the most valuable human inventions in the future, alongside Ethereum and Bitcoin. This article is sourced from a research report by author Teng Yan, compiled, organized, and written by Foresight News.
Table of Contents:
Our Time is Running Out
Two Philosophies’ Stories
Key Questions
I have been contemplating the debate between Ethereum and Solana, which is a hot topic in the cryptocurrency field. Here, I do not intend to delve into their technical differences, 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 offer my personal perspective on the direction of our industry’s development.
I believe Solana may become one of the most valuable human inventions in the future, alongside Ethereum and Bitcoin.
Our Time is Running Out
Cryptocurrencies have been in existence for over 10 years. They have attracted billions of dollars in investment from investors and have become a magnet for attracting the most talented individuals. We may be one of the industries with the highest concentration of talent, excluding perhaps artificial intelligence.
However, we have yet to discover that elusive killer use case: something people cannot live without, something that would cause immense pain for ordinary individuals if it were taken away. In this way, it would be impossible for governments to shut down cryptocurrencies.
We urgently need the “ChatGPT moment” for cryptocurrencies. ChatGPT is the fastest-growing application to reach 100 million users in the shortest time, taking only 2 months.
As time goes on, the pressure is mounting. Although cryptocurrencies currently have some political and social support, these sentiments will diminish over time if no impactful results are produced. We are standing at a crossroads, and the next few years will determine whether cryptocurrencies will become a crucial, world-changing technology.
We cannot wait any longer; the time must be now.
To achieve a killer application, the infrastructure layer must be prepared.
Two Philosophies’ Stories
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 be the best execution layer.
Low cost, low latency, high throughput
Solana optimizes for atomic composability, which it considers the most useful feature of blockchain
Improved user experience (UX) for the Ethereum Virtual Machine (EVM), such as not requiring token approval
Solana scales with Moore’s Law, which has been effective for decades
After 3 years of battle-testing, tools and partnerships are in place
Toly succinctly outlines his vision here:
On the other hand, Ethereum’s philosophy is to first establish a decentralized and censorship-resistant blockchain and then improve its usability over time. This has given ETH currency a premium. Ethereum’s future development plans (Surge, Verge, Purge, Splurge) focus on improving its scalability. This is a journey that will unfold gradually over several years, rather than immediately. Currently, transaction costs are high, and throughput is low.
The well-known blockchain trilemma points out 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 comes at the expense of the third.
There is no perfect blockchain; trade-offs are necessary.
Much of the debate between Solana and Ethereum revolves around the nature and degree of these compromises. The key question is how to balance these trade-offs: 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 actually 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 the assurance that I control my assets and no entity can take them away from me. Otherwise, I would choose a bank. But for gaming? Social media? By achieving greater user ownership and adjusting incentive mechanisms, these improvements can be made to existing platforms without the need for complete decentralization.
Given this, here is my current mental model for the future of blockchain:
Power Law: a few (<5) general-purpose chains will capture the majority of attention
There will be multiple chains, many of which will have specialized use cases, and application-specific chains will be ubiquitous
There is no one-size-fits-all solution.
Ethereum and Solana will coexist. They both have the potential to thrive and become massive technological platforms. However, I find myself leaning towards Solana's philosophy, despite its flaws: weak censorship resistance, the need for fee markets, and the urgent demand for lightweight clients.
Because Solana is now ready to support consumer-facing large-scale applications, for example, compressed NFTs can only be used on Solana.
We need to find the ChatGPT moment for cryptocurrencies. Now, not in another 5-10 years. Solana may be our best choice to achieve this goal.
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