Solana (SOL) Founder Addresses Major Economic Security Issue

4 months ago 0

While the dollar-denominated value of the Solana (SOL) staking ecosystem reaches $70 billion, cryptocurrency enthusiasts are wondering whether its economics are safer than that of its key rival Ethereum (ETH).

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Solana (SOL) Could Finally Be Close to Ethereum (ETH) Based on This Metric
Yakovenko de Solana (SOL) on the LST: “Neither your keys, nor your economic security”

Solana (SOL) Could Finally Be Close to Ethereum (ETH) Based on This Metric

With an aggregate stake value of $70 billion in equivalent, the economic security of Solana (SOL) is approaching that of Ethereum (ETH). At the same time, this indicator remains one of the main catalysts for L2 to choose Ethereum (ETH), says Jun Soo Kim of betting platform Apybara.

The overlooked nuance here is that $70 billion is being wagered because a large portion of it belongs to the foundation and its close venture capitalists and, more importantly, because of the inflation of ~$20 million per day for bettors.

The funniest thing is that economic security is apparently a joke meme despite this. https://t.co/gQEJ6o9BlY

— ℳiLLiΞ X (@llamaonthebrink) March 22, 2024

Ethereum (ETH) supporters doubted these estimates. A Synthetix (SNX) contributor who goes by @llamaonthebrink on X highlighted the imbalance of SOL bets.

The Solana (SOL) betting scene is highly concentrated: a large portion of locked SOL belongs to the Solana Foundation or associated venture capital firms.

Furthermore, most importantly, SOL’s supply is affected by inflation of 20 million dollars per day for its participants. Therefore, the large proportion of SOL staked cannot be interpreted as an indicator of economic security for the average holder.

According to tracker Stake Rewards, Ethereum (ETH) and Solana (SOL) remain the largest cryptocurrencies in terms of net value of staked coins.

Yakovenko de Solana (SOL) on the LST: “Neither your keys, nor your economic security”

At the same time, Solana (SOL) sees over 65% of its supply locked in staking, while Ethereum (ETH) holders only injected 26% of available supply into staking mechanisms.

Solana (SOL) founder Anatoly Yakovenko managed this debate and highlighted that the Ethereum (ETH) staking ecosystem was also centralized:

Unless it comes from the Lido, Coinbase and Binance region, it’s not economic security, it’s just sizzling inflation.

Even though the coins in liquid staking protocols still belong to their initial owner, Yakovenko recalled an old motto of blockchain fans: “Not your keys, not your financial security.” In general, the very concept of “economic security” seems like a meme to the founder of Solana (SOL).