Kyle Samani Analyzes Solana’s Potential to Eclipse Ethereum

During his enlightening presentation at TOKEN2049 on September 19, Multicoin Capital’s co-founder Kyle Samani provided a compelling analysis of why Solana could eventually surpass Ethereum as a leading Layer 1 (L1) blockchain network.

Good morning, everyone! I’m Kyle Samani, co-founder and Managing Partner at Multicoin. Today, I’ll discuss why we believe Solana has the potential to overtake Ethereum. Some of you might already agree, others might find this idea radical or unlikely. My aim is to make you reconsider the underlying factors.

Today’s talk is structured into three parts. First, I’ll briefly revisit Ethereum’s history, essential for understanding its current state and challenges. Next, I’ll discuss why Solana is in a favorable competitive position. Finally, we’ll explore key metrics indicating that Solana has either surpassed or is close to surpassing Ethereum—data points we at Multicoin pay close attention to.

Before I begin, I must clarify two points. First, today’s opinions are my own and do not necessarily reflect those of Multicoin. Second, this presentation does not constitute investment advice or an offer of investment advisory services by Multicoin.

Ethereum’s Journey Let’s dive into Ethereum’s history. It’s been around for nine years, launching in July 2015—a key fact that we’ll emphasize today. Ethereum has had ample time to address its challenges and define its path, which I’ll discuss in detail later.

What has happened in these nine years? I believe there are three significant developments:

1. The Rise of DeFi: While DeFi had some traction before 2020, it truly exploded during the “DeFi Summer” of 2020, five years after Ethereum’s launch.
2. Adoption of a Roll-up-Centric Scalability Roadmap: In October 2020, Ethereum decided to adopt a roll-up-centric scalability roadmap. However, this roadmap isn’t particularly friendly to DeFi, leading to issues like cross-chain bridges and network fragmentation.
3. Transition from Proof of Work (PoW) to Proof of Stake (PoS): The Ethereum community had planned to transition to PoS even before the mainnet launch in 2015, but it took seven years to actualize, highlighting Ethereum’s slow pace and lack of clear direction.

Ethereum’s Scalability Roadmap Frankly, Ethereum’s scalability roadmap has changed multiple times, initially featuring concepts like Plasma and state channels. Eventually, in 2020, Ethereum settled on a roll-up-centric roadmap.

However, even this is now under scrutiny, with recent public discussions about expanding L1 or introducing multiple block proposers—ideas more akin to strategies seen in projects like Solana, now re-entering Ethereum’s discourse.

We don’t know what Ethereum will decide, which could take months to clarify. But it’s important to note that the roadmap from four years ago is now, at least partially, questioned or potentially completely overturned. Ethereum has been around for nine years, yet it seems to be back at square one. What gives?

Solana’s Prospects Before discussing Solana, one more point on Ethereum: it’s no longer the center of value capture. The roll-up-centric roadmap explicitly shifts transaction fees and MEV from L1 to L2, L3, or even L4. While this roadmap successfully pushed transactions to L2, it also moved most value creation away from Ethereum itself.

People will tell you Ethereum can still be used for data availability, which is true. However, the value of DA is almost zero. There’s sufficient DA both on Ethereum and elsewhere. Ultimately, claims that “ETH is money” are circular and unverifiable—simply a belief imposed without logical basis.

The real litmus test for whether something is money is simple: ask how coffee is priced at your local café. If it’s priced in ETH, then ETH is money. If it’s priced in dollars, then dollars are money. That’s the standard for determining money, not anything else.

As we look forward to Ethereum’s decision-making and potential roadmap revisions, the community faces a critical juncture. The unclear positioning and slow decision-making process pose substantial risks to Ethereum’s dominance in the blockchain space.

Thank you for your time, and I look forward to exploring these themes further in the questions and discussion to follow.

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