Why Solana Co-Founder Toly Is Against National Crypto Reserves

Solana co-founder Toly posted on social media to express his opposition to the state's crypto reserves. He said bluntly that if the government takes charge of crypto reserves, decentralization will surely fail. In his opinion, the government's intervention will break the original decentralized ecological balance of cryptocurrencies. The original intention of cryptocurrency was to break free from the constraints of the traditional financial system and achieve de-mediation.

The government's participation in crypto reserve management is very likely to lead to excessive regulation. Based on its own policy goals and financial stability considerations, the government will formulate a series of rules. These rules may limit free transactions of cryptocurrencies and hinder the development of innovative applications. For example, the government may restrict the transaction limits, transaction objects, etc. of cryptocurrencies, making it difficult for cryptocurrencies to play their advantages.

From the perspective of centralized power, government management of encrypted reserves will lead to centralized power to government departments. The power originally scattered in many nodes will be gathered in the hands of the government. This runs contrary to the concept of decentralized and distributed cryptocurrency. Once power is concentrated, the decision-making process may lack sufficient transparency, triggering a crisis of trust.

To take a step back, if there must be crypto reserves, Toly believes that it is more appropriate for states to run their own reserves. This can serve as a hedge against the Fed's potential mistakes. The Federal Reserve's monetary policy sometimes deviates, affecting economic stability. States manage their own encrypted reserves, which can reduce the impact of Federal Reserve policy mistakes to a certain extent.

The economic structure and development needs of different states vary. Allow states to manage their own encrypted reserves and be able to flexibly adjust their strategies according to their own situation. State with a major economy in the technology industry can allocate more reserves on cryptocurrencies related to technology; states with a major economy in traditional manufacturing can choose appropriate crypto assets based on their own industry characteristics.

The states operate crypto reserves and can also form a competitive situation. Different states will explore more effective models and strategies in the process of managing reserves. This competition is conducive to the development of the entire cryptocurrency industry and promotes innovation and optimization.

Toly stressed that if a national crypto reserve is to be available, its standards must be based on objectively measurable requirements. These requirements should be reasonable and justified, rather than set subjectively at will. For example, cryptocurrencies that do not meet objective standards cannot be included in the reserves because of the influence of certain interest groups.

Objective and measurable standards can ensure the fairness and stability of reserves. Taking Bitcoin as an example, its total amount is fixed and its algorithm is open and transparent, which gives it an advantage in meeting objective standards. If the reserve assets are selected based on similar objective standards, the quality of the reserve assets can be guaranteed.

Toly is confident for the Solana ecosystem. He said that if there are goals that need to be surpassed, the Solana ecosystem can handle it. Solana has performed well in terms of transaction speed and more with its high-performance blockchain technology.

The Solana ecosystem has a wide range of application scenarios. From decentralized finance (DeFi) to non-fungible tokens (NFT), many projects are developed based on Solana. The activeness of these projects has injected strong vitality into the Solana ecosystem and enabled it to meet various challenges.

Solana's developer community is also very active. Many developers continue to contribute code and develop new applications to the Solana ecosystem. Their creativity and enthusiasm are an important guarantee for the Solana ecosystem to continue to develop and achieve beyond its goals.