Sunday, April 2

‘Ethereum killer’ Solana dims | Bitcoin Portal

The past year has seen the emergence of several “Ethereum killers”, but the most prominent of them all was Solana, a blockchain that promises to deliver the best of Ethereum, only faster and for much lower fees.

The spectacular rise of SOL, capable of jumping to the top ten cryptocurrencies on the market, came from its elegant technology and also from a certain celebrity dust, sprinkled by the likes of FTX founder Sam Bankman-Fried, among others.

But lately, Solana’s glow has started to fade as the fledgling blockchain has been hit with a series of problems.

The most recent came this week, when a hacker exploited a cross-chain bridge called the Wormhole, making off with BRL 1.7 billion worth of Ethereum in the process.

A forensic analysis by researchers at the Paradigm revealed that the hack was possible because of a flaw in Solana’s interface with Wormhole.

Stolen funds weren’t exactly exchanged, and people criticized Solana for neglecting the security side of Vitalik Buterin’s famous “blockchain trilemma” — a set of three elements a blockchain must deliver: decentralization, security, and scalability.

And they have a point. Solana is in the big leagues now, and hackers shouldn’t be able to play with R$1.7 billion in cryptocurrencies.

The episode was smoothed over thanks to Chicago-based investment firm Jump Capital, which donated enough ETH to make up for all the stolen funds. Jump’s unexpected gesture helped calm markets after Solana’s SOL token crashed after the hack, but it also served to highlight another issue with blockchain: the outsized role of venture capitalists’ involvement in the project.

Few blockchains other than Bitcoin are as decentralized as they claim to be, but Solana’s token allocation is more geared towards professional investors than most.

The Information reported recently how Solana insiders made billions last year. already one video YouTube channel that is circulating in the community, shows two billionaire VCs laughing about how much SOL they have (“Solana Billionaire VCs Are Laughing At You”).

The upshot of all this is that SOL retail buyers are likely to be washed away when token lockout periods expire and professionals dump their bags on the open market.

Solana is hardly the only blockchain where fat investors are making money at the expense of ordinary cryptocurrency believers, but it still doesn’t look great.

Meanwhile, the project is also struggling with congestion on its blockchain. In recent weeks, traders have complained that Solana has become sluggish as the network becomes overloaded with spam and bots. This is also a familiar complaint in the cryptocurrency world, but in this case it’s ironic as Solana’s fans regularly brag about his speed.

Put it all together – the security breach, the allocation of tokens by too many VCs, the congested network – and it’s hard to see Solana in the same light that made everyone fall in love with her in 2021 (including Decrypt, who called it “Cryptocurrency of the Year”).

However, the news is not all negative. For this alleged “Ethereum killer”, all of its recent tests reflect the same growing pains experienced by another famous blockchain that suffered a disastrous hack, disputes over governance and complaints about network congestion. You probably know it — it’s called Ethereum.

*Translated and edited with permission from