Cyber Capital’s founder and Chief Investment Officer, Justin Bons, has addressed recent concerns surrounding Solana (SOL), dismissing claims that it could suffer a fate similar to the collapsed Terra Luna project. In a detailed post, Bons refuted the comparison, emphasizing the strength of Solana’s economic model and sustainability.
Key Points from Justin Bons
Bons took to X to argue that criticisms of Solana’s economic design are exaggerated, calling the comparison to Terra Luna “ludicrous.” He highlighted the network’s inflation and burn mechanisms, noting that Solana follows a more traditional blockchain model, similar to Bitcoin (BTC) and Ethereum (ETH).
Sustainable Economics
Bons praised Solana’s current inflationary model, which includes a long-term inflation rate of 1.5% and a 50% burn rate of the base transaction fee. According to him, this setup ensures that Solana maintains sustainability while also introducing scarcity into the token’s supply. He described the mechanism as “perfect,” noting that the controlled inflation ensures long-term viability, and the burn mechanism supports scarcity—a key factor in driving long-term value.
He also pointed out that Solana’s design is aligned with Ethereum’s EIP-1559 upgrade but noted Solana’s superior scalability. “SOL can scale its base layer,” Bons said, contrasting it with Ethereum, where scalability remains a challenge.
Addressing Token Distribution Concerns
One of the criticisms against Solana has been its token distribution, but Bons argued that Solana’s upcoming unlocks are more favorable than those of other emerging blockchains, such as Aptos (APT), Sui (SUI), and Sei (SEI). He reiterated that Solana is positioned more advantageously compared to its competitors, both in terms of distribution and scalability.
A user questioned changes in Solana’s burn rate, particularly the removal of the priority fee burn. Bons responded by clarifying that only the priority fee burn was affected, while the base fee burn—where most fees are expected to come from—remains in place. This, he stressed, ensures that Solana’s deflationary mechanism remains robust.
Comparison to Terra Luna
The root of the controversy lies in comparisons made between Solana and Terra Luna, which collapsed in 2022 due to flaws in its algorithmic stablecoin design. Bons dismissed these comparisons, stating that Terra Luna’s collapse was based on a fundamentally flawed economic design. Solana, on the other hand, follows proven economic principles used by established blockchain projects.
He also highlighted the role of “bootstrap” inflation in blockchain ecosystems, a phase where high inflation exists but decreases steadily over time—a practice that both Bitcoin and Ethereum employed in their early stages.
Conclusion
Justin Bons’ defense of Solana highlights the blockchain’s long-term sustainability and sound economic design. By comparing Solana’s mechanisms to those of more established blockchains, he argued that Solana is not only secure from the risks that brought down Terra Luna but is also well-positioned to continue growing.
At the time of writing, Solana’s price was up 1.13%, trading at $132.49 as of Tuesday, September 17.
Related topics:
AI Coins and Nvidia Stock Surge Following CEO’s Vision of New Industrial Revolution
