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Welcome to the world of Solana, a revolutionary cryptocurrency that has been making waves in the digital finance space. With the increasing popularity of blockchain technology and the growing demand for decentralized financial solutions, Solana has emerged as a promising contender with its unique features and impressive capabilities. In this blog, we will explore the history, uniqueness, features, and future of Solana, and how it is shaping the landscape of decentralized finance (DeFi). So, whether you are a seasoned crypto investor or just curious about the latest trends in the crypto world, read on to discover why Solana has been gaining traction and capturing the attention of the crypto community.
Solana is an open-source project implementing a new, high-performance, permissionless blockchain. It’s a web-scale blockchain that provides fast, secure, scalable, decentralized apps and marketplaces. The Solana Foundation is based in Geneva, Switzerland and its founders are Anatoly Yakovenko, Greg Fitzgerald, Raj Gokal, Stephen Akridge, and Zed Zed.
The Solana Foundation was founded with a mission to advance the adoption of decentralized technologies as a public good. The vision of a world where individuals are empowered to retain ownership of their data and can access networks through which they transfer value without being reliant on third-parties.
The overarching goal of the Solana software is to demonstrate that there is a possible set of software algorithms using the combination to create a blockchain. So, this would allow transaction throughput to scale proportionally with network bandwidth satisfying all properties/ challenges of a blockchain: scalability, security, and decentralization.
Furthermore, the system is able to support an upper bound of 710,000 TPS on a standard gigabit network and 28.4 million TPS on a 40-gigabit network. The system currently supports 50,000 TPS (Transactions per second) and 400ms Block Times.
In November of 2017, Anatoly Yakovenko published a whitepaper describing Proof of History, a technique for keeping time between computers that do not trust one another. From Anatoly’s previous experience designing distributed systems at Qualcomm, Mesosphere and Dropbox, he knew that a reliable clock makes network synchronization very simple. When synchronization is simple the resulting network can be blazing fast, bound only by network bandwidth.
Anatoly’s implementation began in a private codebase and was implemented in the C programming language. Greg Fitzgerald, who had previously worked with Anatoly at semiconductor giant Qualcomm Incorporated, encouraged him to reimplement the project in the Rust programming language. Greg had worked on the LLVM compiler infrastructure, which underlies both the Clang C/C++ compiler as well as the Rust compiler. Anatoly gave it a shot and just two weeks later, had migrated his entire codebase to Rust. Sold. With plans to weave all the world’s transactions together on a single, scalable blockchain, Anatoly called the project Loom.
On February 13th of 2018, Greg began prototyping the first open-source implementation of Anatoly’s whitepaper. The project was published to GitHub under the name Silk in the loomprotocol organization. On February 28th, Greg made his first release, demonstrating 10 thousand signed transactions could be verified and processed in just over half a second. Shortly after, another former Qualcomm cohort, Stephen Akridge, demonstrated throughput could be massively improved by offloading signature verification to graphics processors. Anatoly recruited Greg, Stephen and three others to co-found a company, then called Loom.
Around the same time, Ethereum-based project Loom Network sprung up and many people were confused about whether they were the same project. The Loom team decided it would rebrand. They chose the name Solana, a nod to a small beach town North of San Diego called Solana Beach, where Anatoly, Greg and Stephen lived and surfed for three years when they worked for Qualcomm. On March 28th, the team created the Solana GitHub organization and renamed Greg’s prototype Silk to Solana.
On April 8th, 2020 Solana Labs transferred all IP related to the protocol and 167m SOLs to the Solana Foundation, whose headquarters are in San Francisco Bay Area, West Coast, Western US. Solana Labs plans to transfer more SOLs to the Foundation. Solana Labs expects to retain a few SOL tokens to support operations (estimated to be 50m, but this is subject to change). In June of 2018, the team scaled up the technology to run on cloud-based networks and on July 19th, published a 50-node, permissioned, public testnet consistently supporting bursts of 250,000 transactions per second. In a later release in December, called v0.10 Pillbox, the team published a permissioned testnet running 150 nodes on a gigabit network and demonstrated soak tests processing an average of 200 thousand transactions per second with bursts over 500 thousand. The project was also extended to support on-chain programs written in the C programming language and run concurrently in a safe execution environment called BPF.
Since its inception, the Solana team — comprised of pioneering technologists from Qualcomm, Intel, Netscape, and Google — has focused on building the tech required for Solana to function with these ground-breaking performance standards.
Technical Capability
Solana as a blockchain delivers several different breakthrough solutions that help to make it one of the most performant Layer 1s in the world. There are a number of groundbreaking innovations put forth by the Solana team, each with an application to security, bandwidth, and decentralization. To summarize for readers who are likely more well versed on Ethereum, the Solana blockchain;
- Uses no state as part of its Programs (Ethereum stores state, making it slower)
- Has on-chain clock verification (for trusted timestamps, rather than block height)
- Streams transactions without waiting for global consensus (without sacrificing security)
- Miniaturizes data packets and transmits them using UDP (lower memory requirements)
- Removes the mempool (By forwarding unconfirmed transactions to upcoming validators)
- The key technical advantages here are the block speeds and low gas fees.
Token Whitelists
One of the key wins is that of the token structure system on Solana. On Solana, everything is tokenized when possible, and this key design decision allows us to get some interesting wins over Ethereum. One such feature that we will have as a part of this is the token whitelisting system. Users who get whitelisted on the platform will receive a whitelist token as part of the process. That token essentially grants access into the given Swap by the pool manager (in this case, pool managers are the teams running the sales).
Historically, one of the things that crypto tries to do is make things free and equivalent to all — which in general is why we often see so much whitelist sharing in communities and groups of investors. Often times, it’s users who wish to give their allocations to other individuals that see the most trouble with making such a deal work. It’s not particularly native to something like Ethereum, but on Solana we can deliver on that feature. By making whitelist tokens directly transferable, users will be able to “gift” their whitelists to other individuals on the platform.
This is a general win for the community — you can now help support your fellow traders and investors by giving them access to sales that perhaps they didn’t access in time, or missed. In general, not everyone will want to buy into every possible sale — yet you can still benefit your community or group of friends by winning a whitelist for a sale you weren’t planning on entering.
Additionally, it opens up the potential for token whitelist markets, which could potentially be a thriving community of individuals who buy and sell token whitelists.
Tokenized KYC
Tokenizing KYC in this manner is yet another win from using Solana. When users successfully pass KYC, they will be granted another token by the pool manager, which greenlights them for a sale (along with the token whitelist). The key benefit here is that, though KYC tokens are not tradeable (there are plenty of reasons why!) it is the beginning of a complete migration from off-chain centralized solutions to on-chain KYC. Such an innovation is possible on Ethereum, though it has thousands of times higher gas costs and is nowhere near as blockchain-native.
Solana Blockchain Apps are Built on Rust
Rust is one of the fastest growing languages according to GitHub the State of the Octoverse. For Solana, Rust solved the issues of memory safety and thread concurrency. The Facebook Libra Project also chose Rust as their programming language. It seems like the Rust Blockchain ecosystem is growing alongside the growth in the programming language itself.
“Using LLVM, the same compiler that targets WASM, we provide a great set of tools for developers to write high-performance smart contracts in C/C++ and Rust that execute contracts on GPUs. Although Solana isn’t using WASM, developers can re-compile C and Rust code written for WASM compilers in the Solana compiler with minimal changes. Thus, developers can easily migrate their applications from other major WASM chains like Dfinity, EOS, Polkadot and Ethereum 2.0.”
Solana has Partnered with Chainlink for DeFi Oracle Data
Back on the 23rd of March 2020, Solana announced integration with Chainlink, so they could provide high-speed Oracle data feeds to DeFi applications.
“We plan to make Chainlink the oracle solution for both this initiative and the standard across all Solana Dapps. By doing so, Dapps will get secure access to all the inputs and outputs they need, while avoiding the major pitfalls with trying to deploy self-made oracles, such as long time delays, additional expenses, and even fatal security flaws.”
“Solana couples the Chainlink oracle with a non-sharded, low-latency, high-capacity replicated state machine. We can help with the oracle and marketplace problem by offering more block producers per second, more traders per second, and more price feeds per second. If you design your marketplace such that it behaves fairly and if at least one honest block producer participates in a certain time window, then our performance can help maximize the odds of an honest block producer participating in the market. To offer some concrete numbers, Ethereum blocks are produced every 15 seconds. Solana has 400 ms blocks, with block producers rotating every four slots (1600ms).”
Solana is Quicker
Solana has been evolving for over 2 years and has been designed to scale from the genesis block!
It currently has been tested to scale to 56,000 TPS back in March 2020. (In test lab conditions can purely scale to 111k in May 2020)
- Max. Transactions Per Second: 59,490
- Block times: 400ms
It’s been designed to scale with hardware, bandwidth and compute industry gains. So, expect these numbers to scale as the industry scales!
Solana is Cheaper
Defi applications can not only rest assured, that it will be quick enough, but also know that there is no situation where a transaction is going to cost $1 in gas fees to quickly be processed!
The current Solana transaction fee is $0.00025 per transaction.
Solana is Decentralised
At the time of writing the Solana MainNet had 128 independent validators securing the Solana Blockchain Network.
Solana is Open Source
You can download Solana software code straight from Solana Lab’s GitHub and have your own node up and running in a very short time. There is plenty of documentation on how to do this over at Solana Docs!
8 Core Innovations
In order to create a decentralized, permissionless network that matches the performance of a single node, the Solana team developed 8 key technologies:
- Proof of History (POH) — a clock before consensus;
- Tower BFT — a PoH-optimized version of PBFT;
- Turbine — a block propagation protocol;
- Gulf Stream — Mempool-less transaction forwarding protocol;
- Sealevel — Parallel smart contracts run-time;
- Pipelining — a Transaction Processing Unit for validation optimization
- Cloudbreak — Horizontally-Scaled Accounts Database; and
- Archivers — Distributed ledger storage
The scalability problem has plagued many cryptocurrencies since almost day one. Blockchain ledgers and decentralized payment networks provide decentralized security to users — but usually, the more decentralized security they provide, the longer it can take for new transactions to be verified and added to the blockchain. These networks are faced with the challenge of providing ample transaction speed as their user count and transaction volume continues to increase, while still preserving the security and decentralization of the network.
When we talk about scalability and throughput, we’re referring to how many transactions can take place per second (this capability is called transactions per second (TPS)). With a high volume of transactions occurring every second, time becomes a crucial element for efficiency. Each computer (or node) processing transactions on a decentralized blockchain network has its own internal clock on which it operates. With thousands of nodes all over the world, there are bound to be slight discrepancies with local system clocks. This becomes problematic when the decentralized network needs to reach consensus about which transactions have taken place and the order in which they occurred. The timestamp synchronization problem is inherent in both Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus mechanisms.
When transactions occur, they are timestamped according to their local system clock. Then, when other nodes verify the transactions, messages about their confirmation or rejection are also timestamped. The inherent discrepancies between local system clocks (even those from nodes acting in good faith) ultimately pave a path for attacks where bad actors can try to take over a cryptocurrency network using fake transaction broadcasts that closely approximate real timestamps — for example, “fake stake” (or “resource exhaustion”) attacks in the case of PoS, and Denial-of-Service (DoS) attacks in the case of PoW. To ensure that transactions have not been manipulated and that funds are spent only once, a lot of time and processing power needs to be dedicated to verifying timestamp accuracy in a PoW or PoS system.
When all the respective clocks across the decentralized network are synchronized, transactions take much less time to verify because individual nodes do not have to dedicate so much processing power toward verifying various timestamps. This synchronization allows the network to optimize for speed, and as a result, the Solana blockchain is inherently fast and engineered for native scalability — enabling higher energy efficiency and higher security through the low processing power and the tamper-resistant nature of its synchronized timestamps. Solana’s efforts to boost transaction speed rely on a semi-centralized structure in which a node leader is elected and all nodes agree to adopt one universal source of time.
Solana’s built-in mechanism for synchronizing time across nodes helps the network support a theoretical peak capacity of 65,000 transactions per second, currently. Although this figure is supported by a testnet rather than real-world implementation, even at-scale speeds of 50% of Solana’s testnet capacity would be a ground-breaking achievement for the blockchain space. In terms of today’s transaction speeds, 65,000 transactions per second is around 10,000 times faster than Bitcoin, 4,000 times faster than Ethereum, and 35 times faster than Ripple — even around 2.5 times faster than Visa. The protocol is theoretically designed to scale with Moore’s Law, doubling in capacity every two years with improvements in hardware and bandwidth.
All of this makes Solana worth paying attention to for crypto enthusiasts.
There are several signals indicating Solana has a bright future. Traditionally, venture capital investment is considered a strong indication that a project has the right ingredients for success.
From that perspective Solana is in good company. Solana recently raised $314 million to fund its technological development. Andreessen Horowitz, one of the biggest Silicon Valley venture capital firms led the round of funding.
Demand should rise as the crypto market learns more about SOL. There will be more liquidity in the markets as a consequence, and SOL prices should therefore run higher.
In other words, as computers get faster, so will Solana.
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