Solana shows the dark side of monolithic blockchains

Everyone agrees that blockchains need to be scaled. How do you disagree? This is the “modular” versus “monolithic” conversation happening in the industry, and it's one of the most interesting – and sometimes controversial – debates.

Modular scaling requires low-value transactions to evolve into a hierarchical system of layer-2s and even layer-3s, eventually leading to the underlying chain. This approach, accepted by the Ethereum (ETH) community, has a major problem: it leads to network fragmentation and a poor user experience.

Monolithic staking — best described by Solana (SOL) — calls for keeping all transactions on a single chain and streamlining the network with hardware, software, and consensus enhancements. The primary benefit of this approach is a better user experience. The main disadvantage is that it cannot be implemented, not without sacrificing the features that attracted blockchain in the first place – decentralization and resilience.

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Proponents of the monolithic approach often misunderstand the basic service that a permissionless chain provides. It's not a transaction process – that's what decentralized networks do. Decentralized networks offer a small property called a secure blockspace. Think of it as fuel, but a decentralized economy. Like all other scarce assets, secure blockspace has a limited supply. But demand changes, so price is the ultimate judge of who should use it.

There's an old joke in commodities that says, “The best cure for oil prices is high oil prices.” Higher prices can lead to higher supply in the long run – even if there isn't always more production coming out of the ground. After all, higher prices are now guaranteed to reduce demand. They force everyone to use the product efficiently and charge the small users full price.

That may sound unfair, but the goal is efficiency, not fairness. The alternative is to have a third party such as the government either ration fuel or subsidize it. Neither works as intended. Allocation leads to long lines, subsidies lead to waste. Imagine: Kids go on a joyride with a factory that can't work.

Welcome to Solana Current Affairs. The monolithic chain has experienced high demand during memecoin mania in recent months, resulting in high transaction failure rates. Users received repeated attempts to submit their transactions, compounding the problem. Solana doesn't have a network mempool, but now has a real queue.

This is what you would expect to happen if a secure block space is so cheap.

Modular chains provide a safe block space for different users – $20 to trade in ETH but only 2 cents to use Arbitrum. But Solana wants to give a $1 business as much security as a $1 million transfer — even if a $1 business, like the kids on a joyride, doesn't need it.

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To be fair, one of the improvements Solana developers are working on is better payment markets that are more responsive to demand. But if these improvements work, small traders will simply be priced out of the high season. Unlike a modular chain, they have nowhere else to go.

Another solution developers are working on is ways to run networks with improved software and faster hardware. What they don't realize is that doing so invites many smaller transfers of value – if you buy a lot cheaper, there's no asking limit. When the Soviet Union subsidized bread, people fed it to their animals.

Meanwhile, the core network infrastructure will be more centralized and stable. As Solana regularly does, a chain optimized to run at peak performance at all times is highly unlikely to go down.

The intentions of the unitary approach may be laudable, but the results are not—not if we're looking at decentralization and resilience.

This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.