In a series of thought-provoking tweets, Anatoly Yakovenko, the co-founder of Solana Labs, has recently ignited discussions about the possibility of Ethereum functioning as a layer-2 (L2) solution for the Solana blockchain. This proposition has raised interesting questions about such an integration’s potential benefits and challenges. Let’s delve deeper into Yakovenko’s considerations, exploring the concept of Ethereum as an L2 protocol for Solana and its implications for the decentralized finance (DeFi) ecosystem.
Solana Co-Founder Proposes Ethereum As Secure L2 Protocol
Yakovenko proposes that Ethereum could serve as an L2 protocol, suggesting that this possibility is “probably more likely than you might think at first glance.” He highlights that L2s act as bridge protocols, providing one-way security for asset holders.
Under this proposed setup, SOL asset holders on Ethereum would have finality guarantees, ensuring the safe exit of their assets back to the Solana blockchain. Even in the event of a double spend or an invalid state transition on Ethereum, users can retrieve their SOL assets securely. However, three key components are necessary to make Ethereum an L2 protocol for Solana.
Submitting Ethereum Transactions to Solana: To enable secure interoperability, all Ethereum transactions must be submitted to the SOL blockchain, making the necessary transaction data accessible to Solana’s network.
SPV Root for Resulting State: A Simplicity Payment Verification (SPV) root, representing the agreed-upon state root, would need to be submitted as proof of Ethereum consensus signatures aligning on a specific state root. This enables validators to reach a consensus on the Ethereum state.
Bridge Timeout for Fault Resolution: A bridge timeout mechanism would be required to identify and address faults within the bridge protocol. These faults could include conflicting SPVs for the root, invalid root computation, and censorship. The timeout mechanism would facilitate effective fault resolution.
While the proposal offers a way to secure Solana assets on Ethereum, it is essential to understand the limitations and potential risks associated with this integration. Yakovenko emphasizes that holding assets on Ethereum would be safe, but it would not be advisable to lend or maintain positions against them.
In the event of an Ethereum fault, Solana assets held on Ethereum would become separated from the Ethereum social consensus fork, rendering the representations of these assets worthless. If someone lent Solana USDC on Ethereum, the borrower could withdraw the USDC on Solana. The lender would receive a valueless token. This situation resembles holding USDC on Ethereum’s proof-of-work chain.
Yakovenko further notes that while central limit order books (CLOBs) would remain functional in this setup, automated market makers (AMMs) and non-flash loan borrowing and lending protocols would encounter limitations.
Responding to a question about Ethereum’s consideration of becoming an L2, Yakovenko suggests that this is a permissionless bridge protocol, implying that Ethereum does not need to consider this integration explicitly. He states, “This is a permissionless bridge protocol. Eth doesn’t need to consider anything.”
Remarkably, Yakovenko’s contemplation of Ethereum as an L2 protocol has sparked discussions about the possibilities and challenges of such an integration. While the proposal offers a means to secure Solana assets on Ethereum and enhance interoperability, it does come with certain limitations and risks.
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