- When Solana’s staking value surpassed $70 billion, discussions concerning its relative economic security versus Ethereum arose.
- Concerns about inflation and centralization cast doubt on the staking ecosystem’s apparent economic stability in Solana.
Total value locked in the staking ecosystem of Solana (SOL) has increased to an astounding $70 billion, which has sparked a lot of conversation in the cryptocurrency industry over its relative economic resilience compared to Ethereum (ETH).
Value Staking’s Significance
Jun Soo Kim of the Apybara staking platform has highlighted the crucial role of aggregated staking value, particularly in influencing Layer 2 (L2) preferences for Ethereum users. Solana’s staking economy, which might potentially signal a turning point in the rivalry between these two dominant cryptocurrency companies, is a sign of growing shareholder confidence.
The nuance missed here is that $70B is staked because a large portion of it belongs to the foundation and their close VCs and more importantly because of the ~$20M/day inflation for stakers
Funniest part being that economic security is apparently a meme for solbros despite this https://t.co/gQEJ6o9BlY
— ℳiLLiΞ X (@llamaonthebrink) March 22, 2024
Ethereum aficionados express disapproval of the price, citing the concentration of staked SOL within the Solana Foundation and associated venture capital organizations, notwithstanding Solana’s noteworthy accomplishments.
This concentration casts doubt on the real economic fortification that the staking value is meant to provide, especially in light of the continuous $20 million daily staking inflation.
The effects of inflation on Solana’s ecology are also discussed, including how daily minting could reduce the average staker’s worth. Nevertheless, data from Staking Rewards shows that Ethereum and Solana are both leading staking platforms with sizable net values locked.
The Rivalry Over Staking Gets Stronger
One interesting feature of this competition is the supply proportion allotted to staking: nearly 65% for Solana and 26% for Ethereum. Anatoly Yakovenko, the founder of Solana, has added to the conversation by criticizing the centralization of Ethereum’s staking, especially in the case of liquid staking protocols run by significant companies such as Lido, Coinbase, and Binance.
On the other hand, as ETHNews previously reported, a recent Glassnode study highlighted Lido (LDO) as the top player in Ethereum’s liquid staking landscape, further consolidating power among a small number of businesses.
Yakovenko’s remarks emphasize the critical necessity of having private keys for true asset ownership and control, which is in line with the fundamental blockchain concept, “Not your keys, not your economic security.”