In brief
- Solana is launching a bridge to Ethereum called "Wormhole."
- The scalability blockchain thinks it has applications for DeFi.
- It believes projects can leverage Solana's high speeds and avoid Ethereum's congestion.
Solana, the blockchain focused on scalability, is connecting to a network struggling with congestion.
Solana today announced Wormhole, a cross-chain bridge to Ethereum that allows projects to move back and forth to take advantage of Solana’s purported “high speed and low cost” and then hop back to Ethereum for settlement, if they wish.
According to the press release, teams comfortable operating in Ethereum don’t need to learn Solana to use Wormhole, which “connects ETH and ERC20 tokens to SPL tokens”—the native token of Solana.
In other words, this is all about DeFi, the set of decentralized finance applications that allow for everything from margin lending to tokenized asset trading—without banks or central authorities.
It’s huge business right now, with over $10 billion of value locked in Ethereum-based smart contracts, according to DeFi Pulse. Solana thinks there could be more.
Said Solana, “DeFi has momentum and excitement on its side. It should be attracting even greater multiples of new capital, but congestion and high gas fees result in aborted trades or significant slippage, the types of issues that keep money on the sidelines.”
Ethereum has been bumping up against its self-constructed limits, which is why all eyes are on Ethereum 2.0, a forthcoming proof-of-stake version of the network that should ease congestion.
Other blockchain projects have tried to cash in on the DeFi trend, often pointing to the Ethereum network’s limitations. Tron developers, for example, have created very similar versions of Ethereum’s DeFi dapps in a bid to replicate that ecosystem.
Recognizing that convincing everyone to switch blockchains is a tough sell, Wormhole uses a different approach, allowing Ethereum users to exploit advantages on the Solana blockchain without jumping ship on Ethereum. It’s seeking to create a symbiotic relationship instead of an antagonistic one.
Solana founder and CEO Anatoly Yakovenko told Decrypt, “Each chain has its own unique features, ecosystems, and value propositions. We believe in a multi-chain future where chains lean on each others’ strengths to enable new applications that haven’t been possible until now.”
And, of course, there are implications beyond DeFi, from gaming to payments. But those, like wormholes, are all theoretical at this point. Now that the technology is there, Solana needs to figure out what to do with it. So, it’s done what any innovative company would do—it’s outsourced it.
Solana is hosting a virtual hackathon for the bridge starting October 28.
And Yakovenko reckons that folks who experiment with Solana, whether at the hackathon or on-chain to make a quick trade, may just stick around to build a better network.
“Solana is particularly good at cheap and fast on-chain price discovery. But who knows what the community will come up with!” he told Decrypt. “Someone may generate SPL tokens with the intent to stay temporarily within the ecosystem, but end up staying permanently. It’ll be up to the users!”