Ethereum becoming a layer-2 for Solana is “probably more likely than you might think,” says Anatoly Yakovenko, co-founder of Solana Labs.
The CEO and co-founder of the Solana project, Anatoly Yakovenko, commented on Sunday, July 2, the idea of using Ethereum as layer 2 for the Blockchain. In a series of tweets posted on Sunday, Yakovenko took a closer look at how such an integration might take shape, suggesting that technical collaboration is “probably more likely than you might think at first glance.”
Noting that these scaling solutions “are bridging protocols that provide one-way security,” Yakovenko argues that Ethereum being Layer 2 for Solana would mean that holders of SOL assets on the Ethereum Blockchain would have “finality guarantees that they can exit back to Solana, even if Ethereum double spends or creates an invalid state transition.”
Layer 2 solutions, it should be remembered, are designed to solve the problems of scalability and high commissions at times of high load on the network. However, in the case of Solana, using Ethereum as a second layer has a few different advantages.
What Could Make This Work?
Getting this setup to work would require first sending all Ethereum transactions to Solana, according to Yakovenko, as well as sending a simplified payment verification (SPV) for the resulting state, something that would serve as evidence that a consensus has been reached among validators. of Ethereum regarding the state of the network.
Finally, to identify and address potential failures within a bridging protocol, a bridge timeout mechanism will be necessary. Some examples of failures, according to Yakovenko, include conflicting SPVs for the root, invalid root computation, and censorship.
Limitations and Risks of ETH-Based Solana Layer 2
The Solana Labs co-founder highlighted the limitations and potential risks associated with this integration, saying that while it would be safe to hold SOL assets on the Ethereum Blockchain, it will not be safe to “lend or hold positions against them.”
A key risk is the possibility of an Ethereum failure or a controversial social consensus fork within the Ethereum network. In such a scenario, representations of Solana’s assets held on Ethereum could break away from the consensus fork, resulting in a situation where these assets become effectively worthless.
Lending USDC (Circle’s dollar-pegged stablecoin) based on Solana on Ethereum, could lead to a situation where the borrower can withdraw the actual USDC on Solana’s network, while the lender on Ethereum receives a “junk token”.
This scenario, Yakovenko argues, is similar to the experience of holding USDC on Ethereum’s Proof-of-Work (EthPow) chain, where certain tokens may lose value or functionality due to network issues or changes.
Additionally, the integration of Solana assets into Ethereum may have implications for various DeFi protocols. While centralized order books (CLOBs) are likely to continue to function, automated market makers (AMMs) and no-flash borrow and lend protocols could face limitations or challenges, potentially leading to inefficiencies or restrictions in the provision of liquidity and trade.
Yakovenko’s proposal came just after Ethereum co-founder Vitalik Buterin expressed his concerns regarding how US regulators are targeting various cryptocurrency projects, including Solana, which the US Securities and Exchange Commission has labeled as unregistered securities on its recent lawsuit against Binance.
“They don’t deserve it, and if Ethereum ends up ‘winning’ via getting all other Blockchains kicked off exchanges, that’s not an honorable way to win, and in the long run probably not even a win,” Buterin tweeted. last week.
By Audy Castaneda
