Since @jason_chen998's article "Angry at not fighting" on ETH fermented, there have been many discussions online these days about the competition between ETH and Solana, and I have no intention of repeating or elaborating on them. I will add a perspective (not FUD), that is, from the perspective of primary market innovation and financing, after all, many of these projects have not yet entered the public eye and are still busy with their plans.
In the past two years, ABCDE has talked to more than 1,000 projects, and although it certainly does not cover the overall situation of the primary market, the sample size should not be small. The feeling in 2023 is that ETH and Solana are developing in the primary market, and even due to the expectations of Eigenlayer and the entire reStaking+LRT ecosystem, ETH is still slightly ahead in the primary market.
However, in 2024 there was a relatively large shift, the entire market no longer buys into the completely oversupplied Infra projects, and the "ghost chain" phenomenon has caused everyone's disgust. Vitalik himself also changed his tone in the August article "The Next Decade of Ethereum", stating that "Basically, I think the tools we have or are about to have are sufficient to build the best applications in every domain where it makes sense to use Ethereum".
The change in Vitalik's tone in the first half of the second half of 2024, the nearly $100 million seed round financing of a certain AI Infra project, and the opening of Matr1x with a download volume of 2.5 million and a FDV of over $100 million - the superposition of these three independent but temporally close events is a turning point in my personal view - the peak of Infra and the bottom of applications. After that, Infra began to decline, and applications began to slowly rise, of course, this is a timeline stretched out over the next few years, and it will not happen overnight.
In the past, the major innovations in Crpyto, such as the ICO in 2017, the DeFi Summer in 2020, and the Play2Earn and Non-Fungible Token in 2021-2022, all occurred on ETH, and more importantly, they occurred on the ETH L1. This has also allowed ETH's token price to soar. But the current market sentiment, from the token price level, everyone is confident that Solana will break through its previous high, while the endless worries about ETH returning to $4,000, not to mention the previously mentioned ETH breaking through $10,000. In the secondary market, Solana's PumpFun is thriving, while ETH, although still far ahead in TVL, has applications that are still the same old faces from 2020-2021, and more and more users are running to L2, with L1 Gas maintaining a low level for years.
The primary market is actually facing the same problems. Over the past 6 months, I have clearly felt that application-type projects have increased, with all kinds of prediction/betting markets, AI applications, DePIN, micro-innovations in DeFi, PayFi, and 3A game blockbusters emerging one after another. I'm not sure where the next big innovation breakthrough will be, but just based on the impression in my mind, the project ecosystem distribution is roughly like this.
Prediction/Betting Market - Ton/Solana/Monad
AI - Solana/Base/Monad
DePIN - Solana/MegaETH/Monad
DeFi - Arbitrum/Berachain/MegaETH/Monad
PayFi - Ton/Solana/Monad/MegaETH
Game - Sui/Ronin/Immutable X
RWA - ETH/Solana
It can be seen that regardless of where the next major application-level innovation is, Solana currently has the greatest opportunity, followed by Monad and MegaETH performing well, except for some RWA-related projects, there are very few new projects running completely on the ETH L1. In the L2, Arb and Base are the most capable (referring only to the application level, OP has basically taken the path of launching Infra), but even if a blockbuster or even a phenomenon-level application comes out on top, the value that ETH L1 can capture under the current architecture is probably very little.
I personally think the most promising new track is AI and PayFi, with AI currently being led by Solana and Base, and Base having previously completed the first AI-to-AI payment in history, and recently launching a new fully on-chain AI agent that can create a crypto wallet and Twitter account (optional) in 3 minutes. As for Solana, the emergence of the AI Meme track needs no further elaboration. Of course, if you really study Goat and ACT carefully, you'll know they're not just memes, but have the potential to create a brand new track and paradigm.
PayFi is a contest between the old hands Ton+Solana and the new stars Monad+MegaETH. This is a track that is almost impossible to refute, as basically everyone knows that Crypto is actually best suited for payments, which is also the original intention behind Satoshi Nakamoto's invention of Bitcoin. It's just a matter of which chain/project can ultimately realize this long-cherished wish at what point in time. (Finally, I'd like to mention that there have also been some projects based on the Lightning Network doing PayFi recently, let's see if this round of Lightning can rise up.)
Having said so much, it is not to continue FUDing ETH, I personally also don't think that Solana can really Flip ETH with the momentum of this round, ETH alone with its current community + technical accumulation is enough to sit firmly in the second place. The only thing I'm worried about is whether ETH is willing to be content with the status quo, willing to let innovation and value capture all happen on L2, and be content with just doing DA and settlement on its own L1 (while also facing competition from projects like Celestia), with the token price also remaining so calm. But I personally don't have an answer either, the weakness of ETH L1 in capturing value from L2 is an established fact, and the L1 Gas and TPS are indeed not enough to support Mass Adoption-type applications. Relying solely on the old DeFi + possibly the new RWA track seems not enough to make everyone see ETH reaching the $10,000 peak. If in the next few years, BTC is $15-20,000, Solana is $500-1,000, and ETH is still hovering around $3,000-4,000, the confidence and influence accumulated over the past 10 years will certainly be gradually eroded.
How to break the deadlock? This is probably not the responsibility of VCs, I look forward to the developers and entrepreneurs of ETH to tell us the answer.
