Article by Aryan Sheikhalian, Head of Research at CMT Digital, originally published on CryptoSlate.
Ethereum is making a big bet on the future of rollups. But true to its characteristic style, Solana has chosen a rather different path—not only expanding block capacity but also creating customizable execution environments with first-level control for developers.
Introducing Network Extensions—the most important and often misunderstood infrastructure initiative of Solana to date. Although often likened to sidechains or "Solana's version of appchains", this comparison has underestimated their true potential. Network Extensions allow the creation of specialized execution environments without disrupting liquidity and connectivity between applications—opening up a new space for specialized applications while still being tied to the main network.
This is not just an expansion strategy. It is a declaration of how crypto infrastructure should operate in the future.
Unlike Ethereum, which forces developers to push computation to Layer-2 and faces liquidity fragmentation, Solana is building a unified foundational layer with high customization capability—where specialization is a fundamental factor right from Layer-1. With Network Extensions, Solana maintains the security mechanism from validators, supports distinct consensus models, custom transaction logic, and does not require creating new chains or accepting the limitations of rollups.
Customization without fragmentation
While Ethereum builds Layer-2 to increase throughput, Solana develops Network Extensions for specialization. Ethereum's rollups, although efficient, all operate under a nearly identical model: multi-purpose block space, minimal differentiation, and liquidity fragmented across multiple isolated chains.
In contrast, Solana's Network Extensions allow developers to build their own execution environments from scratch: a separate consensus mechanism, independent transaction logic, isolated storage, and a processing flow that does not compete with the main network. More importantly, all of this maintains unified connectivity and liquidity on Layer-1.
Data Management in Solana Style
Unlike Ethereum, which sets a fixed standard for rollups, Solana actively does not impose a single model for Network Extensions. The goal is to encourage experimentation—as long as the extensions still ensure state validation and maintain a tight connection with Layer-1, preserving the state and unified liquidity.
To achieve this, Solana has introduced specialized "data streams", similar to Ethereum's blobspace. A prominent example is ZK Compression— a collaboration between Helius and Light Protocol. By compressing account states and using zero-knowledge proofs for verification, ZK Compression demonstrates Solana's scalability while maintaining high verification and speed.
Comparison with Ethereum: Prioritizing throughput over flexibility
While Solana expands the execution space with Network Extensions, Ethereum pursues two main directions: rollup and preconfirmation.
Rollup: aggregates off-chain transactions and sends them back to Ethereum L1, sacrificing fragmented liquidity and independent state.
Preconfirmation: reduce perceived latency by providing soft guarantees before writing to the block—useful but not groundbreaking.
Solana takes a detour: thanks to the ability to achieve finality in under 1 second, they do not require preconfirmation; due to Network Extensions, they avoid the complexities of L2 and keep all operations within a unified chain.
Reasons Developers Should Care
Network Extensions lower the barriers to create a customizable execution environment without the need to launch a new chain or compromise user experience. This is the premise for a range of specialized blockchain applications—from high-speed DeFi to IoT infrastructure.
Some potential applications include:
DeFi: A distinct environment that supports high-frequency trading, low latency, and regulatory compliance such as KYC.
Supply chain management: Processing logistics data in a segregated environment, ensuring integrity without congesting the main network.
DePIN & IoT: Efficiently receiving and processing IoT device data, integrating into decentralized physical networks.
Gaming: Optimizing transaction processing in games, instant payments, and customizable virtual economies.
The Future of Network Extensions
Network Extensions change the approach to expanding blockchain—not just by processing more transactions, but by the ability to support various types of applications. As more developers experiment with specialized environments, Solana's infrastructure can evolve into a network of specialized layers, while still being unified at Layer-1.
Instead of being fragmented like many other ecosystems, Solana maintains customizability right within the mainnet—reducing friction, preserving connectivity, and enabling developers to build without starting from scratch. This model can pave the way for distinct DeFi platforms, next-generation consumer applications, and blockchain solutions for legally compliant enterprises.
The success of Network Extensions will depend on the community, development tools, and practical applications. However, the initial signs are promising. If on the right track, this could be a strategy to reshape blockchain infrastructure: from mere expansion to customization, adaptation, and optimization for each type of application.
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
What is Solana Network Extensions and why is it important?
Article by Aryan Sheikhalian, Head of Research at CMT Digital, originally published on CryptoSlate.
Ethereum is making a big bet on the future of rollups. But true to its characteristic style, Solana has chosen a rather different path—not only expanding block capacity but also creating customizable execution environments with first-level control for developers.
Introducing Network Extensions—the most important and often misunderstood infrastructure initiative of Solana to date. Although often likened to sidechains or "Solana's version of appchains", this comparison has underestimated their true potential. Network Extensions allow the creation of specialized execution environments without disrupting liquidity and connectivity between applications—opening up a new space for specialized applications while still being tied to the main network.
This is not just an expansion strategy. It is a declaration of how crypto infrastructure should operate in the future.
Unlike Ethereum, which forces developers to push computation to Layer-2 and faces liquidity fragmentation, Solana is building a unified foundational layer with high customization capability—where specialization is a fundamental factor right from Layer-1. With Network Extensions, Solana maintains the security mechanism from validators, supports distinct consensus models, custom transaction logic, and does not require creating new chains or accepting the limitations of rollups.
Customization without fragmentation
While Ethereum builds Layer-2 to increase throughput, Solana develops Network Extensions for specialization. Ethereum's rollups, although efficient, all operate under a nearly identical model: multi-purpose block space, minimal differentiation, and liquidity fragmented across multiple isolated chains.
In contrast, Solana's Network Extensions allow developers to build their own execution environments from scratch: a separate consensus mechanism, independent transaction logic, isolated storage, and a processing flow that does not compete with the main network. More importantly, all of this maintains unified connectivity and liquidity on Layer-1.
Data Management in Solana Style
Unlike Ethereum, which sets a fixed standard for rollups, Solana actively does not impose a single model for Network Extensions. The goal is to encourage experimentation—as long as the extensions still ensure state validation and maintain a tight connection with Layer-1, preserving the state and unified liquidity.
To achieve this, Solana has introduced specialized "data streams", similar to Ethereum's blobspace. A prominent example is ZK Compression— a collaboration between Helius and Light Protocol. By compressing account states and using zero-knowledge proofs for verification, ZK Compression demonstrates Solana's scalability while maintaining high verification and speed.
Comparison with Ethereum: Prioritizing throughput over flexibility
While Solana expands the execution space with Network Extensions, Ethereum pursues two main directions: rollup and preconfirmation.
Solana takes a detour: thanks to the ability to achieve finality in under 1 second, they do not require preconfirmation; due to Network Extensions, they avoid the complexities of L2 and keep all operations within a unified chain.
Reasons Developers Should Care
Network Extensions lower the barriers to create a customizable execution environment without the need to launch a new chain or compromise user experience. This is the premise for a range of specialized blockchain applications—from high-speed DeFi to IoT infrastructure.
Some potential applications include:
The Future of Network Extensions
Network Extensions change the approach to expanding blockchain—not just by processing more transactions, but by the ability to support various types of applications. As more developers experiment with specialized environments, Solana's infrastructure can evolve into a network of specialized layers, while still being unified at Layer-1.
Instead of being fragmented like many other ecosystems, Solana maintains customizability right within the mainnet—reducing friction, preserving connectivity, and enabling developers to build without starting from scratch. This model can pave the way for distinct DeFi platforms, next-generation consumer applications, and blockchain solutions for legally compliant enterprises.
The success of Network Extensions will depend on the community, development tools, and practical applications. However, the initial signs are promising. If on the right track, this could be a strategy to reshape blockchain infrastructure: from mere expansion to customization, adaptation, and optimization for each type of application.
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