Ethereum rivals are ‘dead on arrival,’ says Cumberland’s Van Bourg

“What computational ability is possible on Solana that isn’t possible on Arbitrum or Optimism at this point?” Jonah Van Bourg asks

article-image

Maurice NORBERT/Shutterstock modified by Blockworks

share

Despite the crypto market’s turn toward a cautiously positive sentiment, things aren’t looking good for Ethereum’s competitors, according to Jonah Van Bourg.

On the 1000X podcast (Spotify/Apple), Cumberland’s global head of trading says user counts and wallet addresses have plateaued on alternative layer-1 blockchains. 

“Your Solanas, NEARs and Polkadots — and all these other coins — these ecosystems are dead on arrival at this point.”

In the meantime, Ethereum layer-2 solutions like Arbitrum and Optimism are flourishing, Van Bourg says. According to Blockworks Research, the TVL, or total value locked — a measure of the monetary value that resides in a blockchain’s ecosystem — is comparatively low on competing chains.

The current total value locked in Solana stands at approximately $320 million, a little more than one percent of Ethereum’s TVL, which is currently around $26 billion.

Ethereum-based layer-2 chains Arbitrum and Optimism are trending positively and already overshadow Solana’s TVL with values of approximately $2 billion and $900 million, respectively.

Chart by Blockworks Research analyst Spencer Hughes

“So is the multichain thesis still alive for the next cycle?” Van Bourg asks. “I vote no. I think it’s time to write it off.”

The greed factor

Avi Feldman, GoldenTree’s head of digital asset trading, is quick to disagree. 

“Greed is too large to write it off,” he says. “You get projects that are willing to build on things like Solana and Avalanche and NEAR and all of these other protocols because if they’re a competent, good team, they can win that space.”

Incentive programs will draw value to competing protocols, Felman argues, “when the bull market comes back.”

But incentive programs have been the “only draw” for the competing chains, Van Bourg retorts. “That doesn’t last forever.”

Felman expects competing chains to experience a “renaissance” due to their novelty and the “greed factor,” arguing that by onboarding people with incentives, they may potentially reach “escape velocity” to become “real projects.”

Referring to a previous interview with Galaxy Digital’s Mike Novogratz (Spotify/Apple), Van Bourg says the next bull cycle will be the “show me” stage of crypto, whereby projects need to prove their worth at a practical level.

“What computational ability is possible on Solana that isn’t possible on Arbitrum or Optimism at this point?” he asks. 

Felman says it’s not so much about the tech itself, but instead a matter of “use-case fit.”

“The constraint is not always the tech. The constraint is figuring out what to do with the tech,” he says.  

Van Bourg agrees, but suggests that the argument only further proves his point. “If it isn’t about the tech, what’s the advantage of one shiny alt-L1 versus another versus ETH?” Ethereum, he says, “gives you everything you need right now for today’s limited slate of use-cases.”

“If ETH was bowling over because of too many people trying to use it or too much throughput,” Van Bourg says, “then you have an alt-L1 thesis right there.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Screen Shot 2024-05-16 at 14.53.45.png

Research

Loss-versus-rebalancing (LVR) is arguably Ethereum DeFi’s biggest problem, and thus reducing LVR is fundamental to the success of Ethereum. This report dives into the world of LVR. We uncover its importance for AMM designers, discuss the two major mechanism design categories and various projects developing solutions, and offer a higher level perspective on the importance of AMMs in general.

article-image

The courts adjourned the trials against Binance and Tigran Gambaryan until May 22 and May 23

article-image

Industry players have started realizing high-performance computing-related revenues as they buy Nvidia GPUs and secure customer deals

article-image

Yesterday saw Congress’ upper chamber side with the House on a measure aimed at overturning SAB 121

article-image

Oklahoma’s new crypto bill will go into effect in November of this year

article-image

The deposits hit a $20 million cap in just 45 minutes

article-image

Twelve Democratic Senators voted in favor to pass the resolution Thursday