Solana creator Anatoly Yakovenko says that Solana is an Ethereum layer-2 solution through its Wormhole eigenlayer, which enables cross-chain interoperability and scalability. Solana also ends 2023 with a strong performance, overtaking XRP in market cap and recovering its SOL/ETH ratio.
Solana, the high-performance blockchain that aims to rival Ethereum, has made a bold claim: it is an Ethereum layer-2 solution through its Wormhole eigenlayer. This is according to Solana creator Anatoly Yakovenko, who recently expressed this view on X, a social media platform for crypto enthusiasts.
Wormhole is a decentralized protocol that allows cross-chain communication between Solana and other blockchains, such as Ethereum, Binance Smart Chain, and Terra. Wormhole enables the transfer of tokens, NFTs, and data across different chains, creating a bridge for interoperability and composability.
Yakovenko argues that Wormhole effectively makes Solana an Ethereum layer-2, as it allows Solana to leverage Ethereum’s security and network effects while offering faster and cheaper transactions.
Danksharding is a term coined by Yakovenko to describe a future scalability upgrade for Solana, which would involve splitting the network into multiple shards, each with its own validators and state. This would increase Solana’s throughput and capacity while maintaining its low latency and fees.
Yakovenko envisions that once danksharding is implemented, Solana blocks could be submitted to a data-validating bridge contract on Ethereum, which would verify the correctness and finality of Solana transactions. This would create a trustless and secure connection between the two blockchains and potentially open up new possibilities for cross-chain applications and innovation.
Solana ends 2023 with a bang
While Solana’s claim to be an Ethereum layer-2 may be controversial, there is no denying that the blockchain has had a remarkable year, especially in the last month. Solana ended 2023 with a significant upturn, showcasing one of the quickest price recoveries in the final quarter.
The total value locked (TVL) on Solana, a measure of the amount of assets staked or locked in smart contracts on the blockchain, impressively more than doubled in December, escalating from $671.62 million at the beginning of the month to $1.529 billion by December 26th.
However, when denominated in SOL, the native token of Solana, the increase was more modest, from 11.35 million SOL to 12.56 million SOL in the same period. This discrepancy reflects the significant rise in SOL price, which climbed from $59.2 to $121.4, affecting the USD valuation of the TVL.
Notably, Solana overtook XRP, the token of the Ripple network, in market cap, becoming the fifth-largest cryptocurrency with a market cap of $34.8 billion as of December 20, 2023, following an 11% increase in Solana’s value, which outpaced the broader market’s 3% gain.
The SOL/ETH ratio, a metric comparing the value of Solana (SOL) to Ethereum (ETH), is a critical measure of Solana’s competitive position. This ratio has experienced significant fluctuations, with the most recent data showing a recovery in Solana’s standing against Ethereum. The SOL/ETH ratio reached a peak of 0.0175 on September 9, 2023, before dropping to a low of 0.0068 on November 26, 2023.
Since then, the ratio has rebounded to 0.0114 as of December 26, 2023, indicating that Solana is gaining ground on Ethereum.
What’s next for Solana?
With its impressive speed, scalability, and innovation, Solana has proven itself a formidable contender in the blockchain space. However, it also faces many challenges, such as security, adoption, and regulation. Solana will need to continue to evolve and improve its technology, as well as foster its ecosystem and community, to maintain its momentum and relevance in the crypto industry.
Solana’s claim to be an Ethereum layer-2 through Wormhole may be seen as a bold move or a desperate attempt, depending on one’s perspective.
However, it also reflects Solana’s ambition and vision to bridge the gap between different blockchains and create a more open and interoperable web.