ETH vs Solana: Ethereum’s unique advantages and future strategies

Author: Qiao Wang Source: medium Translation: Shan Ouba, Golden Finance

Recently, many people have doubts about Ethereum’s positioning in the encryption ecosystem. Bitcoin is regarded as the value storage chain of "digital gold", and Solana is known as the fastest, cheapest, bridge-less smart contract platform. This has led some superficial observers to believe that Ethereum is awkwardly stuck in the middle.

However,Ethereum currently has advantages that are enduring and cannot be replicated. It is also:

• The smart contract chain with the most Lindy effect  (Lindy effect: things become more valuable or reliable over time)

• The only intelligence that spans the regulatory gap Contract chain

• The only chain consistent with Coinbase

• The only chain with "profit"

These advantages make Ethereum more capable than its competitors. Conditions for mass adoption by institutions. What the community needs to do is focus on these strengths and stop playing defense.

Lindy

Ethereum is the first fully functional smart contract chain. It has been nearly ten years since the release of the white paper. It has experienced two complete rounds of crypto bull and bear markets and is about to enter the third round. It has never been down due to technical issues, and has nearly a decade of mature tools and security experience. Through repeated tests and its embrace of open source culture, most potential smart contract vulnerability attacks have been identified and fixed. More importantly, Ethereum’s cumulative total value locked (TVL) reaches approximately $40 trillion per day, which is 40 times that of Solana. Although the TheDAO attack occurred in history, it was 7 years ago, and most newcomers today do not understand it.

All that said, putting institutional money into the Ethereum ecosystem is far less risky than Solana. You might argue that Solana's high returns make up for the risk, but remember, you're not a Goldman Sachs fund manager who needs to risk your career. They're after tens of millions of dollars in annual bonuses, while you just want to make a million dollars with WIF. Cryptocurrencies are risky enough on their own for traditional financial institutions, and advocates within institutions may prefer to minimize the risk of being fired due to unexpected consensus mechanisms or contract vulnerabilities.

Regulatory Divide

Ethereum has a huge mid-term advantage in institutional markets: Chicago The Commodity Exchange (CME) lists ETH futures contracts. Bitcoin is the only other crypto asset listed on the CME. Now nearly 3 years old, this contract has given regulators, especially the Securities and Exchange Commission (SEC), a level of comfort with ETH trading that is not available to SOL. exist.

In addition, in the lawsuit against Coinbase, the SEC characterized SOL as a security, which cast a thick regulatory shadow on SOL until the case was resolved. (May take years). While the SEC has not officially declared that ETH is not a security, most lawyers agree that after Bitcoin, ETH will most likely be considered a non-security. All of this relates to general comfort levels, but also to the possibility of an ETH spot ETF being approved in 2024, which would significantly increase institutional inflows.

Coinbase

Coinbase’s favor for Ethereum is evident through the Base rollup project. Technical aspects aside, Base is arguably one of the most compelling chains in the entire crypto space. More than 100 million KYC users from US-compliant exchanges can directly participate in the Base ecosystem, which means that Coinbase is not only a huge Ethereum distribution channel, but its 100 million user KYC layer also makes Base, and even the Ethereum behind it, a The perfect home for "Compliant DeFi".

A prime example of compliant DeFi is the tokenization of real world assets (RWA). In order to put traditional assets on the chain, most institutional asset issuers require KYC, want to work with a trusted partner like Coinbase, and use a time-tested chain. Many crypto idealists remain allergic to RWAs, but what if I told you that hundreds of millions of people in emerging economies want not just USD stablecoins, but trillions of dollars in U.S. Treasuries, stocks, and real estate? Granted, the U.S. dollar is already far superior to local currencies, but an extra 5-10% annual return is still a game-changer.

Actual rate of return

EIP1559 implementation in August 2021, "merger" in September 2022 " Upon completion, Ethereum now has a "real yield." Specifically, users who stake ETH receive rewards denominated in ETH, partly from newly issued ETH and partly from the fees users pay to have transactions processed on the Ethereum network. Since fees typically exceed newly issued supply, Ethereum's yield is higher than its inflation rate. This is the definition of "real income" and is Ethereum's unique advantage in the crypto world.

Institutions are keen on returns, especially "real returns". It is not difficult to imagine a scenario: when people's risk appetite for cryptocurrencies slightly rises, some institutional money managers will realize that Ethereum can be regarded as both a technology growth risk asset and a source of "real returns." It only takes a few institutions to get involved to start a trend.

Call to action

The Ethereum community needs to unite and act around a clear market strategy . The terms “restaking,” “4844,” “account abstraction,” and “data availability” are not marketing strategies, they are product roadmaps at best, and technical jargon at worst that will only confuse end users. If you haven’t noticed during this wave of Degen mania, users actually care very little about what Ethereum podcasters and protocol developers are passionate about.

Degen users care about cost, speed, and avoiding bridging. In this regard, Ethereum will not be able to catch up to Solana anytime soon. Institutional users, on the other hand, care about the Lindy effect, regulatory comfort, trusted partners like Coinbase, and real returns, which are advantages that only Ethereum currently has. Therefore, becoming the de facto institution-friendly smart contract chain is a highly viable market strategy and, to me, the most obvious one so far.

What we need now is for those Ethereum influencers to stop embarrassingly defending themselves against Solana and Bitcoin. Stop denying that Solana provides a better user experience for Degen, and stop dwelling on Solana’s technical and economic flaws that are trivial and fixable, and don’t stop with that stupid “ultrasonic currency” narrative, which will only make institutions no longer Take you seriously.

On the contrary, we should focus on Ethereum’s current unique and non-replicable advantages and realize the vision that only Ethereum can achieve. Take action before it's really too late!