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- 1 Co-founder of Solana blockchain recently tweeted a suggestion of Ethereum working as Solana’s Layer-2 solution.
- 2 The proposed collaboration can address scalability and interoperability issues.
- 3 Yakovenko explained how the integration can possibly work along with the limits and risks associated with it.
In light of the recent news, Anatoly Yakovenko, co-founder of Solana Labs, has put forth an intriguing proposal of exploring Ethereum’s potential as a Layer-2 solution for the Solana (SOL) blockchain. Yakovenko took to Twitter to share his viewpoint in a series of thought-provoking tweets on July 2, 2023, Sunday.
The thoughtfully planned outline of the proposition sparked lively discussions within the enthusiastic crypto community. The technical collaboration of Ethereum and Solana, as per Yakovenko, is plausible “more likely than you might think at first glance.” Despite the potential risks and limitations, the co-founder believes the amalgamation of these two blockchain platforms is a viable concept.
Would it be possible for ethereum to be a @solana L2? Probably more likely than you might think at first glance. L2s are bridge protocols that provide one way security. In this setup, holders of solana assets on ethereum would have finality guarantees that they can exit back… https://t.co/XE5ETsxGIW
— toly 🇺🇸 (@aeyakovenko) July 2, 2023
Yakovenko’s interesting suggestion was on the heels of a Twitter post by Vitalik Buterin, Ethereum’s co-founder, on June 30, 2023. Buterin expressed his concerns regarding the regulatory actions against crypto projects, including Solana. The U.S. Securities and Exchange Commision (SEC) recently labeled Solana’s token, SOL, as an ‘unregistered security.’
The one comment I'll make is that I feel bad that @solana and other projects are getting hit in this way. They don't deserve it, and if ethereum ends up "winning" through all other blockchains getting kicked off exchanges, that's not an honorable way to win, and in the long term…
— vitalik.eth (@VitalikButerin) June 30, 2023
The entrepreneur mentioned L2 as bridge protocols providing one-directional security. L2 (Layer-2) solutions are well-known strategies devised to address the scalability limitations of its Layer-1 blockchain. Ethereum is one such blockchain to support multiple L2 scaling solutions to remove bottlenecks like scalability, network congestion, and high transaction costs.
Contrastingly, Solana is an open-source blockchain to offer high throughput in a cost-effective manner. Yakovenko’s innovative idea of using Ethereum as an L2 sheds some light on its untapped potential.
As per the entrepreneur, if Ethereum were to support Solana as a second layer, the SOL asset holders on Ethereum would have ‘finality guarantees.’ This means that on using this configuration, investors with SOL assets can safely return back to the underlying Solana blockchain, even in cases of Ethereum double spending or creating an invalid state transition.
Yakovenko’s Method of Using Ethereum as Solana’s L2
In his tweet, Yakovenko mentioned a plausible procedure of integrating Ethereum and Solana. He suggested there are three key features quintessential for making Ethereum work as an L2 scaling protocol.
- For using this setup, all Ethereum transactions are first required to be submitted on Solana. This ensures interoperability along with guaranteeing an availability of necessary transaction data to the Solana network.
- Another step in the process includes submitting a Simplified Payment Verification (SPV) Root for the resulting state. The SPV root is simply a lightweight client that verifies transactions and proves that validators have reached consensus regarding the network’s state.
- Finally, a bridge timeout mechanism has to be implemented to check and rectify the faults within the bridge protocol. Some faults highlighted by Yakovenko are conflicting SPVs for the root, invalid root computation (solvable with Neon Labs’ Ethereum Virtual Machine), and censorship.
Potential Limitations and Risks of Ethereum-based L2 for Solana
By harnessing the capabilities of Ethereum as a scaling solution, Solana can enjoy the benefits of higher asset security and interoperability. However, according to Yakovenko, this interesting alliance has some potential dangers and constraints.
Yakovenko mentioned that although it would be safe to hold SOL assets on the Ethereum Layer-2 network, it would not be safe to “lend them or maintain positions against them.” The potential reason explained by Yakovenko is the future risk of an Ethereum fault or a social consensus fork on the mainnet Ethereum.
If such a situation arises when an Ethereum-based L2 supports Solana, all SOL assets represented on Ethereum will be separated from the consensus fork. In case of this scenario happening, Solana users could still retrieve their digital assets back on the Solana network. However, the representation of these assets on Ethereum blockchain will essentially be worthless.
Moreover, Yakovenko noted that using Ethereum as a second layer for Solana can have implications for the DeFi ecosystem. While using the configuration, he mentioned, the central limit order books (CLOBs) would keep functioning as usual. But other DeFi protocols such as automated market makers (AMMs) and non-flash loan borrowing lending protocols would face difficulties or limitations.
While considering Ethereum as Solana’s L2, Yakovenko presented an interesting point. He highlighted that in case of Ethereum causing a censorship fault “the solana state root eth is worthless, and posted transactions can bump the gas fee to infinity to prove that Ethereum is ded.”
Adarsh Singh is a true connoisseur of Defi and Blockchain technologies, who left his job at a “Big 4” multinational finance firm to pursue crypto and NFT trading full-time. He has a strong background in finance, with MBA from a prestigious B-school. He delves deep into these innovative fields, unraveling their intricacies. Uncovering hidden gems, be it coins, tokens or NFTs, is his expertise. NFTs drive deep interest for him, and his creative analysis of NFTs opens up engaging narratives. He strives to bring decentralized digital assets accessible to the masses.
