"Solana 2022" Seminar Summary: Composability is an Advantage, Not an Ethereum Killer

Organizer: Lou Kerner

Compiler: Deep Tide TechFlow

Seminar Participants:

Kyle Samani: Managing Partner at Multicoin Capital

Mike McGlone: Senior Commodity Strategist at Bloomberg

Joe McCann: Technology Expert

The Solana seminar covered a wide range of topics, with the most time spent on the theme of composability. The seminar is summarized into six key points:

1. Composability is Solana's main advantage

Both Kyle and Joe expressed the same view: composability is a characteristic of web3, and it is also a significant advantage of Solana.

During the seminar, Kyle quoted Jesse Walden's definition of composability:

If a platform's existing resources can be used to build new blocks and can be programmed into higher-level applications, then that platform is composable.

Kyle cited Margin-FI as a typical project with high composability. Margin-Fi is a project that provides web3 institutional brokerage services and can connect with various DeFi services. The following image is a schematic of Margin-Fi:

Then, Joe also provided his definition of composability: "1. The ability to provide truly immersive and rich applications, 2. Composability should allow applications to build on other applications/protocols, 3. Bridging web2 characteristics to web3," and Joe also cited the on-chain order book Serum, as many applications are currently built on its foundation. The following image is a screenshot of Joe's presentation:

Overall, the most suitable analogy to describe composability is Lego blocks, where people can build new Lego structures on existing ones, just as they can build new projects on existing composable projects. Kyle described an exciting prospect that may emerge in the near future:

In the next 12 months, applications will leverage a large number of composable crypto technologies to provide experiences that previously seemed impossible.

Of course, objectively speaking, web2 is also gradually acquiring characteristics of composability. In web2, certain applications can connect and upload data to Dropbox and Google Docs, allowing the use of plugins like Grammarly.

While composability is currently a key feature of Solana, cross-chain composability remains an issue. Although some applications, like Anyswap, have achieved cross-chain composability, the performance of cross-chain composability is currently difficult to match with on-chain composability.

2. Solana's cultural characteristic is that, compared to other Layer 1s, Solana's target users are more likely to be the mass market rather than academic users

In the early days of web3, Layer 1 protocols attracted builders by boasting their academic or engineering achievements. In contrast, Solana is currently more focused on the mass market. FTX is a major supporter of the Solana ecosystem, expanding Solana's influence through various measures, such as Serum (a high-speed, order-based, non-custodial DEX). Additionally, FTX has sponsored the NBA Miami Heat arena, MLB umpire uniforms, and the University of California, Berkeley football field, which are clearly very appealing to the mass market.

Solana's promotion of NFT development is another initiative that is very attractive to the mass market. Considering Solana's low costs and high throughput, as enterprises launch NFT strategies, Solana NFTs position themselves as the home for brands and artists.

The following image is Joe's complete narrative about Solana:

1) Network culture is a very strong force (for example, the correlation between a project's Twitter followers and the project's token price)

2) So far, Web3 has mainly been a paradise for engineers, geeks, and academic experts.

3) FTX connects the real world with the crypto world through sports and entertainment.

4) NFTs bring normative creative culture into the crypto world and Web3.

5) Physical brands will tend to prefer low-cost cultural marketing activities.

3. Solana is very attractive to developers

There are many reasons why Solana attracts many developers, but the most notable reason is its coding language. Ethereum developers must learn a new programming model (Solidity), while Solana uses Rust, a programming language used by 1.1 million programmers, which is several times more than those programming in Solidity. Rust is also often regarded as one of the best programming languages, with such high demand that in 2021, Rust developers' average salaries were higher than those of developers in any other language. This makes Solana an enticing choice for developers looking to enter the crypto space. In fact, a recent report from Electric Capital showed that the number of developers on Solana quadrupled in 2021, far outpacing the other four leading Layer 1s.

McCann believes that developer activity is highly correlated with profitability, and there are increasingly more development tools available for developers on Solana. Joe believes that the emergence of development tools on Solana will trigger a flywheel effect, bringing more developers into the Solana ecosystem.

4. DDoS attacks on the Solana network have not harmed Solana; instead, they have had a positive effect.

One of the concerns about Solana is that DDoS attacks have been plaguing the chain. Both Kyle and Joe believe that DDoS attacks are a feature rather than a flaw, as they indicate correlation. These DDoS attacks also serve as stress tests for Solana. Currently, many Layer 1s do not support chaos engineering because it must be tested in production, as Solana does. Frequent DDoS attacks allow Solana to patch vulnerabilities and strengthen its performance. Ethereum faced DDoS attacks during the Shanghai attack in 2016. These attacks led Ethereum to update and prevent such events from happening again. Therefore, DDoS attacks can be seen as minor annoyances on the path of successful projects as they grow.

5. Because Solana currently ranks fifth in total market capitalization (as of the end of the webinar), Mike emphasized that tokens that previously entered the top five have not performed well subsequently.

Although both Kyle and Joe are very optimistic about Solana, Mike is more cautious because in 2021, Solana's price has already surged (nearly 100 times), and the subsequent prospects of other tokens that have previously risen to fifth place in market capitalization have also declined. Mike pointed out that XRP ranked fifth in 2020, but today it ranks eighth; in 2019, BCH ranked fifth, and now it ranks 26th; in 2018, EOS ranked fifth, and now it ranks 52nd; LTC once ranked fourth, and now it ranks 24th. Mike is concerned that Solana may face the same fate.

Kyle believes that such comparisons are not appropriate because Solana is a space that is very helpful to developers, while Litecoin is "literally nothing." Ripple is like "fringe fraud." In contrast, Solana's ecosystem is growing across various metrics, and Kyle believes that Solana's flywheel has already started turning, and the ecosystem is on the verge of explosion. Mike thinks this mentality needs to be "slightly cleared" of the "highly speculative mindset."

6. Although Solana is a competitor to Ethereum, no seminar member believes it is an Ethereum killer.

Mike, Kyle, and Joe do not believe Solana is an Ethereum killer.

Kyle believes there is certainly competition between Solana and ETH, but it is not a 100% direct competition. Kyle thinks the two can coexist in a binary manner. There are definitely use cases where Solana performs better, such as derivatives trading, which requires low latency due to leverage, making Solana very suitable. Additionally, Ethereum also excels in many areas, especially in the NFT space.

Joe also believes that coexistence is a long-term trend because the programming models of the two are fundamentally different.