- Anatoly Yakovenko, the co-founder of Solana Labs, has proposed the intriguing idea of utilizing Ethereum as a layer-2 (L2) protocol for the Solana blockchain.
- While this integration offers a way to secure Solana assets on Ethereum, there are potential risks and limitations associated with this interoperation.
Anatoly Yakovenko, the co-founder of Solana Labs, has recently instigated an intellectual discourse on Twitter concerning the prospect of Ethereum serving as a layer-2 (L2) protocol for Solana blockchain. This proposition holds substantial implications for the decentralized finance (DeFi) sector and inspires several intriguing queries related to potential advantages and challenges of such an integration.
In Yakovenko’s conceptualization, Ethereum could function as an L2 solution, providing a one-way security bridge protocol. This arrangement would grant SOL asset holders on Ethereum the assurance of finality, permitting them to safely revert to the Solana blockchain even amidst anomalies like a double spend or an invalid state transition on Ethereum. Nevertheless, actualizing Ethereum as an L2 solution entails three key components:
- Ethereum Transactions Submission to Solana: For secure interoperability, all Ethereum transactions would have to be recorded on the SOL blockchain, ensuring that the necessary transaction data is available to Solana’s network.
- SPV Root for Resulting State: A Simplicity Payment Verification (SPV) root, symbolizing the agreed-upon state root, would need to be submitted as proof of Ethereum consensus signatures aligning on a specific state root. This mechanism enables validators to reach consensus on the Ethereum state.
- Bridge Timeout for Fault Resolution: A bridge timeout mechanism would be indispensable for identifying and resolving faults within the bridge protocol. This includes situations like conflicting SPVs for the root, invalid root computation, and censorship.
While Yakovenko’s proposal potentially fortifies Solana assets on Ethereum, it’s critical to comprehend the associated limitations and risks. Yakovenko highlights that while keeping assets on Ethereum would be safe, leveraging them for lending or holding positions would not be recommended.
In the face of an Ethereum fault, Solana assets held on Ethereum could become detached from the Ethereum social consensus fork, rendering these assets worthless on Ethereum. Furthermore, while central limit order books (CLOBs) could operate effectively under this configuration, automated market makers (AMMs) and non-flash loan borrowing and lending protocols might face constraints.
In response to a query about Ethereum’s stance on becoming an L2, Yakovenko asserts that this is a permissionless bridge protocol, suggesting Ethereum’s explicit consideration isn’t necessary.
Interestingly, Yakovenko’s contemplation of Ethereum as an L2 protocol has fueled discussions about the potential and challenges of such integration. Meanwhile, at the time of this report, SOL’s price has been showing bullish momentum, demonstrating a potential breakout in the near future.