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While the USD-denominated value of Solana's (SOL) staking ecosystem hits $70 billion, cryptocurrency enthusiasts are guessing whether its economics are safer than those of its key rival Ethereum (ETH).
Solana (SOL) might finally be close to Ethereum (ETH) by this metric
With the aggregated staking value of $70 billion in equivalent, Solana's (SOL) economic security is getting close to that of Ethereum (ETH). At the same time, this indicator remains one of the main catalysts for L2 choosing Ethereum (ETH), Jun Soo Kim of Apybara staking platform says.
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
— ℳiLLiΞ X (@llamaonthebrink) March 22, 2024
Funniest part being that economic security is apparently a meme for solbros despite this https://t.co/gQEJ6o9BlY
Ethereum (ETH) supporters doubted these estimations. A Synthetix (SNX) contributor who goes by @llamaonthebrink on X stressed the imbalance of SOL staking.
Solana's (SOL) staking scene is heavily concentrated: A large portion of locked SOL belongs to either Solana Foundation or associated VC firms.
Also, most importantly, the SOL supply is affected by the $20 million per day inflation for its stakers. Thus, the large share of staked SOL cannot be interpreted as an indicator of economic security for the average holder.
As per the Staking Rewards tracker, Ethereum (ETH) and Solana (SOL) remain the largest cryptocurrencies in terms of the net value of staked coins.
Solana's (SOL) Yakovenko on LSTs: "Not your keys, not your economic security"
At the same time, Solana (SOL) sees over 65% of its supply locked in staking, while Ethereum (ETH) holders only injected 26% of the available supply into staking mechanisms.
Solana (SOL) founder Anatoly Yakovenko addressed this debate and highlighted that Ethereum's (ETH) staking ecosystem was also centralized:
Unless it comes from the Lido, Coinbase, Binance region it’s not economic security, it’s just sparkling inflation
Despite the fact that coins in liquid staking protocols still belong to their initial owner, Yakovenko recalled an old blockchain fan motto: "Not your keys, not your economic security." In general, the very concept of "economic security" looks like a meme to Solana's (SOL) founder.