The era of opinionated L1s is here and Solana will win it on mobile

The days of blockchains competing on TPS and winning developers based on long-term technical roadmaps are over. High performance is now the price of entry for any L1 to gain adoption.

As a result, L1s are increasingly competing at the top of the stack — on applications and users instead of infra and whitepapers. 

Solana is in a prime position to capitalize on this shift. We’ve been following Solana since we invested in 2018. The chain and ecosystem are developed enough that Toly and Solana Labs don’t need to pay as much attention to performance. Solana’s focus on internet capital markets (ICM) and the team’s Seeker efforts give it a natural path to be opinionated from the hardware all the way up to the app layer. Solana will ultimately win the capital formation space because it is best positioned to win where billions of people and institutions interact: on mobile.

Blockchains need to be opinionated

It used to be true that blockchains could generate significant value by providing neutral backend infrastructure for third-party developers to build on. With the notable exception of Bitcoin, this is no longer the case. L1s now have regulatory clarity, high-performance technology, and competition from financial giants. It’s no longer enough for blockchain teams to give out ecosystem grants and fund core infrastructure development and then expect meaningful growth to follow. 

The basis of competition has moved up the stack.

In recent market cycles, centralized crypto apps began cutting L1s out of the equation by offering their own infrastructure. Binance built the BNB Chain while Coinbase built Base which, although it is an L2, captures a lot more value for itself than it passes on to ETH. 

New chains like Stripe’s Tempo and Circle’s Arc are natively built to support a specialized blockchain stack, benefiting from the parent company’s existing distribution. Hyperliquid made opinionated L1 design decisions to build a perps product that is better than CEXs.

Reasonable minds can debate on how good these chains can become from a technical perspective, but it’s clear that distribution is now king. 

Legacy chains need to become opinionated about how to use their own tech stacks, or they will struggle to capture new users. We are already beginning to see this: Polygon just acquired Coinme and Sequence and became a US regulated payments platform, while Vitalik recently announced Kohaku, pushing a privacy stack for Ethereum. 

For Solana, the initial core team competing up the stack isn’t quite as existential given its defensible tech, revenue, and ecosystem. But competing at the app and design layer would be about playing offense against specialized L1s and capitalizing on the distribution advantages of a large chain. 

First, we should consider what’s hindering the ICM vision from coming to fruition.

ICM needs mobile

Today, the on-chain experience is still clunky, fragmented, and browser-based. There are many ecosystem teams working on improving blockchain performance and attracting liquidity to Solana. But we haven’t cracked the right products to meet people where they are, which is on their phones. 

Internet Capital Markets envision a future where anyone can create or join a market from anywhere with only an internet connection. This will create net-new assets as capital forms from both the top down and the bottom up. But for ICM to break through, the markets need to capture people’s fickle attention — and attention starts on people’s phones. 

Solana’s performance and underlying primitives can make the chain the default operating system for any mobile crypto app. It just needs the right liquidity and apps to show how capital formation happens at scale.

There are few teams better positioned to deliver on mobile ICM than Solana Labs itself. Our bullishness starts with Anatoly Yakovenko, who could have rested on his laurels after creating a top blockchain but instead decided to hop back in the trenches with Solana Mobile and return to his mobile roots. Labs has the distribution chops and leadership buy-in on mobile to build a vertically-integrated app that scales to millions of users. 

Solana Labs has already addressed half of the equation, building mobile hardware and a mobile ecosystem that is native to Solana. Solana Mobile just launched the SKR token, a native asset for crypto’s mobile era. But the scope shouldn’t stop there: Solana Labs should leverage its technology to unlock new branches of ICM, expanding its mobile efforts to the app layer. 

The building shouldn’t stop until every mobile crypto app is running Solana in the background. Just imagine a front-end with Toly’s fingerprints on it: a DEX, perps, and payments integrations. Get the man another two coffees and a beer and sign us up.

Implications for the ecosystem

The elephant in the room is what Solana Labs creating mobile apps would mean for the ecosystem’s developers.

On any closed platform, developers live in fear that Meta or OpenAI will suddenly build their own version of the most successful apps and lock competitors out of their platform. But the Solana team’s vertically integrated apps can show a dramatic departure from that competitive dynamic.

Solana is permissionless, so no one can shut down a competitor — not even Solana Labs itself. Healthy competition can make both Solana Labs and the Solana ecosystem’s developers sharper.

More importantly, the root of Solana Labs’ expanded scope wouldn’t be to highlight its own product or business at the expense of others. Apps designed by Solana Labs would reflect opinionated design decisions that should benefit network health in the long run, rather than maximize short-term value capture. These apps would highlight and compose with the rest of its ecosystem in ways that an independent app or a newer chain might not. This could be good for the ecosystem: Solana Labs can take risks and provide lower margin utilities that an independent company might struggle to justify.

Still, Solana Labs building apps means developers might find it harder to acquire users if their project doesn’t have a distribution or technical advantage. Ultimately, this would force founders to be more strategic about finding an edge when choosing an idea. 

We’ve invested in Solana projects almost every year since our initial investment in 2018. For us, Solana Mobile represents an opportunity beyond the app store duopoly: It’s Solana laying out the infrastructure to dominate the next phase of crypto adoption. Our view is that Solana should build at the app layer to leverage its own distribution network — building, partnering, and acquiring across the ecosystem like any other large player. This will ultimately make the ecosystem more competitive and we’re excited to continue to invest in founders building on Solana.

Winners and losers in the next five years in crypto won’t be determined by speculation or regulatory capture. It’s going to be about which core teams can make the right opinionated decisions about winning the top of the stack. We’ve seen more opinionated strategies take root in other L1s and centralized crypto exchanges. We are eager to see Solana move in this direction as it becomes the go-to venue for internet capital markets.

No Investment Advice: This article is for informational and educational purposes only. It does not constitute financial, legal, or tax advice. The views expressed are the subjective opinions of the authors and do not represent a solicitation to buy or sell any security or digital asset. Any forward-looking statements are based on current expectations and projections and are subject to significant risks and uncertainties that could cause actual results to differ materially.