The economics of the fast-growing Solana blockchain are being slammed by an Ethereum co-founder. As startup cash floods into a slew of new cryptocurrency networks, Ethereum co-founder Joseph Lubin has questioned the viability of competitor projects, including the fast-growing Solana blockchain.
The Ethereum blockchain has grown to become one of the most extensively used digital ledgers in the world, but it is up against rivals like Solana, which has set cheaper transaction rates to attract users. According to Lubin, Solana, which bills itself as a speedier and less expensive Ethereum competitor, is offering outsized rewards to users who validate transactions on the network compared to the income earned by such transactions.
The fast-growing blockchain initiative has already experienced scepticism. Some detractors have said that Solana compromises security for efficiency, and the network has been plagued with major outages. Solana Labs, the firm that created the blockchain, responded to Lubin’s critique by saying that “just looking at protocol income doesn’t convey the complete storey of the long-term profitability” of a blockchain’s economic model.
Lubin’s comments come as tech investors bet large on new projects like Avalanche, Near Protocol, and Solana, which are attempting to establish more efficient alternatives to Ethereum in order to cash in on growing popular interest in cryptocurrency applications.
ConsenSys, a cryptocurrency software business run by Lubin and intimately linked to Ethereum, announced on Tuesday that it had raised $450 million in a fresh round of funding, more than doubling its valuation to $7 billion. As an inflow of new customers turned to its products to understand Ethereum, the company’s worth has skyrocketed. Ethereum is the most extensively utilised digital ledger in fields like decentralised banking and non-fungible tokens, which are quickly increasing. Lubin, who was involved in the network’s development, has become one of the project’s most outspoken supporters on Wall Street. Since late 2020, MetaMask, a ConsenSys software with more than 30 million monthly active users, has racked up about $330 million in transaction fees thanks to a feature that allows users to exchange between cryptocurrency tokens on Ethereum.