Has Solana Solved Ethereum’s Years of Scalability Problems?
Last week, Solana launched a new technology called “ZK Compression” which is said to reduce the cost of Solana’s state and improve its network scalability without relying on Layer 2 solutions. This is a major breakthrough for Solana and a direct challenge to Ethereum’s scalability limitations.
Solana co-founder Anatoly Yakovenko emphasized that all executions happen on Layer 1 and are validated by Layer 1 validators. Justin Bons, the founder and CIO of Cyber Capital, believes that this puts Solana far ahead of Ethereum in terms of practical Layer 1 scalability and solves one of Solana’s biggest survival problems.
The blockchain community has been debating the challenges of decentralization, security, and scalability, commonly known as the “trilemma.” Ethereum chose to outsource its execution layer to Layer 2 solutions, such as Plasma and rollups, to improve scalability while maintaining decentralization and security. However, this decision has led to unexpected chaos within the Ethereum ecosystem, as the value capture capability of Ethereum itself has been gradually weakened with the fragmentation of Layer 2 solutions. On June 29th, the gas fees on the Ethereum mainnet even dropped to 1 Gwei.
The recent debate between Ethereum and Solana has focused on Layer 2 solutions. However, Solana seems to have solved this dilemma, which Ethereum supporters find hard to accept. They question the “Layer 1 nature” of ZK Compression.
In Ethereum’s Layer 2 solutions, the mechanism of Validium is similar to zkRollup, where all transaction validity is enforced using zero-knowledge proofs. The main difference is that in zkRollup, data availability is on-chain, while Validium keeps it off-chain.
Therefore, when Mert Mumtaz, the CEO of Solana’s ecosystem development platform Helius, stated that ZK Compression keeps its data off-chain, the Ethereum community considers it as validium. Adam Cochran, a partner at CEHV, firmly believes that ZK Compression is Solana’s Layer 2 solution and that “one day, the Solana community will realize that they have built a great rollup based on Layer 2 functionality/efficiency, rather than a complete chain.”
To respond to the Ethereum community’s doubts, the Solana community created a meme to mock Ethereum believers for claiming expertise without doing proper research. Mert even jokingly named ZK Compression as ZK validium.
ZK Compression, jointly launched by Solana’s ecosystem development platform Helius and Solana’s privacy project Light Protocol, is a blockchain scaling solution that will directly operate on Layer 1 without the need for Layer 2. This will greatly improve Solana’s network scalability and move towards building an unstoppable, global, and synchronously atomic state machine for financial computing.
According to the ZK Compression document, this technology is a new primitive built on Solana that allows developers to build applications at a large scale. Developers and users can choose to compress their on-chain state, reducing the cost of state by several orders of magnitude while maintaining the security, performance, and composability of Solana Layer 1.
ZK Compression works through a process called state compression, which allows developers to use cheaper ledger space instead of expensive account space to store certain types of data. The “hash” or “fingerprint” of off-chain data is stored on-chain for verification using sparse state trees.
To make the L1 nature of this technology more convincing, Mert specifically mentioned Vitalik Buterin, the founder of Ethereum, to comment on the technical principles of ZK Compression. Vitalik responded seriously, stating that this technology is more like a stateless client architecture.
Vitalik interpreted ZK Compression into three main points: first, there is a new type of account where only the hash of its state is stored on-chain; second, to interact with these accounts, a transaction (TX) needs to be written, specifying the pre-state and post-state hashes of N accounts and providing a validity proof (assuming this means ZK-SNARK); third, the new state requires public availability (which is reasonable, otherwise someone can send money to someone randomly, and their account will be inaccessible, although this can be bypassed by making it a UT XO system, but that would be a major limitation).
Apart from the interpretation, Vitalik also raised questions about the document, particularly regarding the mentioned 128-byte validity proof and whether the public content includes transaction content.
Vitalik expressed his confusion again, stating that the claimed numbers by ZK Compression are like if doing individual SNARK verifications is more expensive than doing some small actions and hash operations (e.g., token transfers). The benefits of ZK rollup come from “one” SNARK packaging “many” transactions.
However, Vitalik’s questions have not been answered. While he initially referred to ZK Compression as a “stateless client architecture,” this increased the confidence of Solana advocates who believe that this technology is indeed Layer 1.
The question remains whether rollup will be the perfect companion for Solana. Solana has been searching for its value within the network. Unlike other altcoins that emerged during the previous bull market, Solana’s valuation logic is not entirely like Bitcoin and Ethereum. Due to the cheap block space, its corresponding token price is difficult to rise significantly. However, Solana continues to focus on compression technology and constantly reduces its costs, which is a huge challenge for the appreciation of SOL.
Even considering Moore’s Law and the continuous improvement of hardware performance, which Solana has optimized for, it does not guarantee that Solana can meet the global demand. However, Solana manages better than other chains in terms of composability and low latency.
Unlike Ethereum, Solana’s mainnet does not aim to be a “B2B chain”; it has always been and will always be a consumer chain. Building large-scale distributed systems is extremely challenging, and Solana has the potential to become the most valuable shared ledger for global transactions.
Regarding rollups, Solana rollups will mostly be abstracted for end users.
Ideologically, Ethereum’s rollup is top-down, with the Ethereum Foundation and leaders deciding that rollup is the best way to scale and then supporting various Layer 2 solutions after the CryptoKitties incident. In contrast, Solana’s demand is bottom-up, driven by application developers with significant user adoption. Therefore, most current roll-up plays are more marketing-driven rather than user demand-driven. This is a significant difference that may lead to a different future for rollups compared to Ethereum.
However, with ZK Compression achieving state compression for Solana, along with Firedancer, multiple concurrent leaders, asynchronous execution, and an ecosystem consisting of thousands of developers, Solana has a real chance in the crypto world.
Tags:
COMP
Helius
SOL
Solana
Ethereum