Despite challenges of scalability and high gas fees facing Ethereum, the founder of EigenLayer, a liquidity restaking platform, maintains that the network remains superior, particularly compared to Solana. Solana, the third most valuable smart contracts platform behind Ethereum and the BNB Chain, has been steadily capturing more market share since its launch, reinforcing its position in the market.
Sreeram Kannan, the founder of EigenLayer, recently argued that while Solana’s prominence is undeniable, the platform prioritizes low latency and global node synchronization over other essential features. In contrast, Ethereum focuses on stability and decentralization, making it, in Kannan’s opinion, a more comprehensive solution. EigenLayer currently manages over $12 billion worth of assets on Ethereum according to DeFiLlama.
Although Kannan acknowledges the efficiency of Solana, he points out some limitations, particularly in its effort to build a global state machine. The primary concern is Solana’s sacrifice of programmability and verifiability. Kannan argues that Ethereum excels in performance, partly due to the success of rollups, which have spiked adoption rates. These off-chain solutions provide instant confirmation and perform better than many web2 applications.
Ethereum’s programmability allows EigenLayer to incorporate more features, including arbitrary decentralization of verifiable tasks, thereby enabling cloud-scale programmability. Mustafa Al-Bassam, co-founder of Celestia, also appreciates Ethereum’s strengths, which he believes are often underappreciated or underdeveloped in other networks. Al-Bassam praised Ethereum’s thriving rollup ecosystem as the largest and most successful of its kind. Data from L2Beat indicates that as of September 30, the layer-2 ecosystem in Ethereum manages over $38 billion, with platforms like Arbitrum and Base standing out.
However, despite the activity in Ethereum’s layer-2 platforms, its native cryptocurrency ETH struggles for momentum. The daily trading chart shows that bulls have yet to push above $2,800, although support remains at $2,400. The sideways trend in Ethereum’s price has been attributed in part to the proliferation of layer-2 scaling solutions, which re-route more activity off-chain. This has led to the network becoming somewhat inflationary as enhancements like Dencun aim to reduce layer-2 transaction costs even further. Consequently, fewer ETH are being burned, contributing to the sluggish price movement.
Overall, while Ethereum faces significant challenges, its emphasis on stability, decentralization, and programmability continues to set it apart from competitors like Solana.
