Since Jason's article on the 'frustration of its own competition' regarding ETH has fermented, there have been many discussions online about the ETH and Solana rivalry in recent days, and I don't intend to repeat or elaborate. I would like to add a perspective (not Fud), that is, from the angle of innovation and financing in the primary market. After all, many of these projects have not yet entered the public eye and are still being actively arranged.

In the past two years, I have discussed over 1,000 projects in ABCDE. Although it certainly does not cover the overall situation of the primary market, the sample size should not be small either. My feeling in 2023 is that ETH and Solana are developing separately in the primary market, and even because of the expectations of Eigenlayer and the entire Restaking + LRT ecosystem, ETH is still leading in the primary market.

In 2024, there will be a relatively significant shift. The entire market is no longer buying into completely excessive Infra projects, and the 'ghost chains' phenomenon has caused everyone's disgust. Vitalik himself showed a clear change in tone in August regarding (the next decade of Ethereum), stating, 'Basically, I believe we already have or will soon have the tools to build the best applications in every area suitable for Ethereum.'

In the first half of 2024, Vitalik's change in tone, a nearly 100 million USD seed round financing for an AI Infra project, and the 2.5 million downloads of Matr1x with only a little over 100 million FDV at launch are three independent but closely timed events that I personally see as a turning point - the peak of Infra and the trough of applications. After this, Infra began to turn downward, and applications started to slowly rise. Of course, this is a timeline extended over the next few years and will not happen overnight.

In the past few major innovations in Crypto, such as the ICO in 2017, DeFi Summer in 2020, Play2Earn and NFTs in 2021-2022, all occurred on ETH without exception. More importantly, they happened on ETH L1. This has allowed ETH's price to soar. However, current market sentiment shows strong confidence in Solana breaking previous highs, while there is endless worry about ETH returning to 4000, not to mention the previously mentioned ETH breaking 10,000. In the secondary market, Solana PumpFun is thriving, although ETH still leads in TVL, the applications are still those old faces from 2020-2021, and more and more users are migrating to L2, while L1 Gas remains low for years.

The primary market actually faces the same problem. In the past six months, I have distinctly felt that application-oriented projects have increased, with various prediction/gambling markets, AI applications, Depin, micro-innovative DeFi, Payfi, and AAA game masterpieces emerging endlessly. It is uncertain where the next major innovation breakthrough will occur; based solely on impressions, a rough ecosystem distribution map of projects looks something like this.

Prediction/Gambling Market - Ton/Solana/Monad

AI - Solana/Monad/Base

Depin - Solana/MegaETH/Monad
Defi - Arbitrum/Berachain/MegaETH/Monad

Payfi - Ton/Solana/Monad/MegaETH

Game - Sui/Ronin/Immutable X

RWA - ETH/Solana

It can be seen that regardless of where the next major application-level innovation lies, currently the greatest opportunities appear to be with Solana, followed closely by Monad and MegaETH. Apart from some RWA-related projects, it is rare to see completely new projects running on ETH L1. In L2, Arb and Base are the most capable (referring only to the application level; OP has basically taken the route of chain Infra). Unfortunately, even if explosive or even phenomenal applications emerge from them, the value that ETH L1 can capture within the existing framework is likely very minimal.

I personally think the most promising new track is AI and PayFi. Currently, Solana and Base are leading the way. Base previously completed the first AI-to-AI payment in history, and recently launched a new fully on-chain AI agent that can create an encrypted wallet and a Twitter account (optional) in just 3 minutes. As for Solana, it has given birth to this new track of AI Meme. Of course, if you really study Goat and ACT, you'll know they are not just simple memes but have the potential to create a brand new track and paradigm.

Payfi is a competition between the two veterans, Ton and Solana, versus the two newcomers, Monad and MegaETH. This is a track that is almost impossible to falsify; everyone knows that crypto is most suitable for payments, which is also the original intention of Satoshi Nakamoto when he invented Bitcoin. It all depends on which time point, which chain/project can ultimately realize this aspiration. (Lastly, I should mention that several projects based on the Lightning Network for Payfi have recently emerged; we will see if this round of lightning can rise.)

Saying all this is not intended to follow the Fud against ETH. I personally do not think Solana can truly flip ETH just by riding the wave of this momentum. ETH, based solely on its current community and technological accumulation, is sufficient to firmly hold the second place. My only concern is whether ETH is content with the status quo, whether it is comfortable with innovation and value capture happening in L2, while it itself remains secure doing DA and settlement in L1 (while also facing competition from projects like Celestia). Its price has also remained stable. However, I personally do not have an answer; the established fact is that ETH L1's current value capture related to L2 is weak, and L1's GAS and TPS cannot support mass adoption-type applications. Relying solely on old DeFi and possibly a new RWA track does not seem enough for people to see ETH reaching the peak of 10,000 USD. If in the next few years, BTC is at 150,000-200,000, Solana at 500-1,000, and ETH is still hovering around three to four thousand, the confidence and status accumulated over the past decade will inevitably be slowly eroded.

How to break the deadlock? This is probably not the responsibility of VCs; I look forward to ETH developers and entrepreneurs to tell us the answer.