ETH and Solana: What to Watch

Author: Lao Bai Source: X, @Wuhuoqiu

After talking about RWA, let's talk about something worth mentioning on ETH and Solana.

The most worth mentioning thing on ETH should be the Native Rollup proposed by Justin some time ago. This is a further expansion of the current Based Rollup. Of course, the implementation difficulty is also much greater

Let me briefly talk about Based Rollup -

This is what Puffer/Taiko is doing. Compared with traditional L2, the sorting rights are given to L1. There are two main benefits. One is that L1 can capture more value, and the other is that all Based Rollups are theoretically interoperable.

Originally I had doubts about 2, but later when I was chatting with a Based Rollup project party, I asked the Founder and confirmed that interoperability is indeed possible, because any 12S slot on L1 has a certain selected validator responsible for block production, and the sorting of all Based Rollups will be responsible for that selected validator, so these Based Rollups can indeed form interoperability.

But there are two subsequent problems

1. There are currently several L2s that occupy an absolutely important position, and I can't think of any motivation to transform into Based Rollup

2. If there are dozens/hundreds of Based Rollups in the future, the burden on the validator responsible for block production on L1 each time will be much greater, and the hardware requirements for him will definitely be much higher than now. And because the validators are elected randomly, that is to say, the hardware requirements of all candidates must also keep up, otherwise you will not be able to withstand the sorting of dozens/hundreds of L2s, and the decentralization of ETH Validator will inevitably be greatly affected.

Let’s talk aboutNative Rollup. Based Rollup gives the sorting rights to the L1 validators, while Native Rollup gives the proof system to the L1 validators, and introduces a pre-compilation to allow L1 to perceive the state transitions of Native Rollup in each block (this pre-compilation blind guess requires a hard fork upgrade to be added). In the early stage of the proof system, Re-execution (that is, the L1 validator runs the transaction by itself) was used as the initial solution, and later Real-Time Proving (based on Snark proof) was used as the optimization solution. However, this requires a substantial improvement in ZK technology (the proof of a block can be produced within a few seconds, which is completely unattainable at present, and it is estimated that it will take at least 3-5 years)

NativeThere are three points worth mentioning

1. You will find that this is actually very similar to the earliest ETH expansion plan. This is not a Rollup, isn’t this sharding?

2. You will find that ETH and Solana meet at a certain point. Solana's two expansion projects MagicBlock's Ephemeral Rollup and Lollipop's extended execution layer are somewhat similar to Native Rollup, and both have a sense of sharding

3. I am not 100% sure, but I think/hope that this is the case, that is, the user experience of Native Rollup and MagicBlock does not require users to switch networks. In other words, you stay on ETH/Solana L1 on MetaMask/Phantom, and your assets do not go in and out of L2 through the bridge. Native/Ephemeral Rollup only serves as an external execution layer to complete the calculation, and then automatically completes the settlement in L1, so that there will be no island problem in liquidity

However, I always feel that the ideal is full, and the reality is very skinny. Not to mention the technical difficulty and the time for implementation, the existing L2 interest division problem alone makes it difficult for people to be optimistic. The development of the currency circle has long ceased to be dominated by the spirit of crypto-punk and technology, but by the arena.

As for the Prague upgrade next month, there are already many articles interpreting it online, so I will not repeat them here. I hope that after this upgrade, 7702 can put an end to the chaos of account abstraction of various EIPs and come up with a final solution at the chain level. Of course, whether the end users and developers will pay for it is another story

Then let's talk aboutSolana

There are also two things worth mentioning about Solana recently. One is the very popularSIMD-0228 proposal some time ago.

The content of the proposal is basically to change the current Sol inflation, from the current fixed annual reduction of 15% to an inflation rate dynamically adjusted according to the pledge rate

Overall, there are several features

1. MEV income status is improved (Solana's MEV income in Q4 2024 is 10 times that of Q1, but with the shutdown of http://Pump.fun, I am curious about what level MEV income will be in 2025)

2. Dynamic adjustment of issuance, setting three balance points of 65%, 50%, and 33% according to the pledge rate

3. The new proposal is not too disadvantageous to small and medium-sized validators

4. It can be seen that Solana is also shifting from "overpayment to ensure safety" to "finding the minimum necessary payment"

Although the proposal did not pass, there are two interesting things worth mentioning

1. Antatoly was not too frustrated. He believed that "Solana's governance needs to be fast and decisive, and fast governance actions will be the key to finding better solutions" In other words, the failure of SIMD-0228 is also a reflection of the autonomous and efficient nature of the Solana network. This proposal took only about one month from Multicoin's initiation to community discussion to the end of voting. "Quickly pass/fail" and then the next one, which is very important for the fast-evolving Solana. 2. The Chinese media's interpretation of the inflation rate of this proposal is almost all wrong. The vast majority of Chinese media, including Chinese Twitter, interpret the inflation part of this proposal as "reducing inflation by 80%, that is, reducing inflation from 4.8% to about 0.8% under the current staking rate of about 65%. I was shocked when I first saw it, and I changed several Souces and they all interpreted it this way! How is it possible? The validators are going crazy! Even if Mev's income increases, the additional issuance income will instantly decrease by 80%, and the Validator will go on strike... Then I went to look at the original proposal and the interpretation of the English KOL. Under the current staking rate, it should be reduced by 0.8% from 4.8% to about 4%, rather than directly reduced to 0.8%. I guess the author of the earliest interpretation article in the Chinese area misread the formula and directly understood it as a reduction to 0.8%. All the media + KOLs copied the homework and copied it wrong.

The second thing I want to talk about is actually not news. It will be available in 2024, but the first time I knew about it was when I was chatting with the founder of the RWA project on Solana. It is the Solana Token Extension. I guess many friends don’t know it, so I’ll share it.

Solana Token Extension - A new generation of SPL token standards, that is, Solana chain-level token solutions, including private transactions (only the amount of privacy, the transfer parties cannot hide), transfer hooks (such as requiring KYC, mandatory royalties), non-transferable tokens (similar to SBT), interest-bearing assets, metadata, etc., a total of 19, which can be used in any combination

This is also the main reason why the RWA project adopted Solana. In addition to TPS, Solana has chain-level native privacy, KYC and other token standard solutions, and they can be combined, which is much more flexible than the various ERC separate token standards on ETH. And for the new generation of Move tethers, it is not possible to have such a rich native level of availability for the time being, so Solana has become their only choice. This also makes me more confident in Solana. Solana can do much more than just Pumpfun and Meme. I believe that many meaningful projects can be made by flexibly using these Token Extensions.

Finally finished talking about ETH and Solana, this weekend I will write the last article in this series, Observations and Thoughts on Crypto X AI in 2025.