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What is Solana?
Solana is a high performance cryptocurrency blockchain that support smart contracts, proof of stake consensus, has a low barrier to entry and timestamps transactions to maximize the blockchain’s efficiency through a mechanism called Proof of History. Solana can process a staggering 50,000 – 65,000 transactions per second and has a theoretical limit of 700,000 transactions per second. In contrast, Bitcoin does 7 transactions per second and Ethereum does 15. Unlike many other cryptos, Solana is a single blockchain(layer 1) and doesn’t delegate operations to an attached chain(layer 2). The design of Solana is largely inspired by existing technologies at Google and Microsoft although these corporations use these designs in a centralized way whereas Solana looks to migrate this over to a decentralized ecosystem. The architecture behind Solana is inspired by the cryptocurrency Filecoin.
How does Solana work?
For starters, Solana is extremely complex. I’ll attempt to break it down given my surface level understanding of the technicalities of the project given that I’m not a cryptographic engineer.
What sets Solana apart from other projects is that it uses something called Proof of History(PoH). PoH isn’t a consensus but rather it’s a component of Solana’s Proof of Stake consensus. PoH works by timestamping transactions when they are added to a block. A new block is added to the Solana blockchain every 400ms which is extremely fast compared to Ethereum’s 15 seconds and Bitcoin’s 10 minutes. Solana uses a decentralized clock to keep track and reference the time stamped blocks. The clock uses the SHA256 hash function which is the same hash function that Bitcoin uses in its Proof of Work consensus. Solana uses this hash function differently though. Instead of using it to “solve” the hash function and create a new block that way, SHA256’s repetitive output is used as the clock’s “tick”. Essentially the clock ticks every 400ms(instead of every one second like a regular clock does) and the block is created with that tick.
It’s important to note that Solana is not a delegated proof of stake(DPoS) consensus despite it having many roles in the blockchain(leaders, validators etc.). In a DPoS consensus, a crypto will assign a role to various network participants(nodes), in Solana’s case all nodes fulfill the various network roles at some point. One of the roles a node adopts is the Leader role, a Leader node is responsible for producing new blocks for the blockchain. The Leader rotates every 4 blocks so every 1.4 seconds given the tick timings. While a node is Leader, it crams in as many transactions into the 4 blocks as it can and then passes those blocks off to what is called Solana Clusters. The nodes in the Solana Cluster validate the transactions, timestamp them and then pass them off to the other relevant nodes in the network.
Unlike other proof of stake cryptocurrencies, there isn’t a minimum number of SOL required to stake in order to become a node operator. With that being said, the amount of block rewards you get when you’re the leader is proportionate to how much SOL you have staked in the network. The leader selection is random but the more SOL you have staked the greater the likelihood you have of becoming the next leader.
There’s 8 Core Innovations which makes Solana what it is as outlined in their Medium post here.
One of them is Proof of History which I’ve already gone over. The remainder are:
2) Tower BFT – Tower BFT improves the network responsiveness by giving validators the power to vote on the current state of the ledger. BFT keeps track of previous votes and allows validators to refer to their previous votes which speeds up the validation process.
3) Turbine – Turbine is relatively straightforward, it takes data and breaks it down into smaller chunks so that it can be sent more efficiently and uses less bandwidth to send.
4)Gulf Stream – I explain this in the upcoming company analogy but essentially Gulf Stream does away with the mempool protocol which is where transactions are in a “waiting room” while other transactions are being processed. Gulf Stream is a new strategy where transactions are forwarded to future nodes before they begin creating the blocks.
5)Sea Level – Similar to Gulf Stream, I explain this through the company analogy but essentially Sea Level allows smart contracts to be executed in parallel in one another. This allows the blockchain to execute thousands of smart contracts without congesting the network and reducing performance.
6)Pipelining – Pipelining works by assigning input data to different hardware based on specifications. This helps to improve block validation times.
7)Cloudbreak– This is Solana’s account database. Cloudbreak is an improvement on previous systems as it can read and write data at the same time. In work in line with the pipelining and archives protocol.
8)Archivers – Archivers are important in the data storage compartment of the Solana blockchain. Archivers are hardware mechanisms that allow access to network information. Validators of the Solana network can pull up transaction history from the blockchain through the Archives mechanism.
I’ll be using CoinBereau’s analogy of how Solana works which you can read here. All credit goes to them and I highly recommend checking out their review as well!
Let’s say you have a company of 100 employees. In this company, you have the traditional departments like accounting, customer service, HR etc. but everyone in this company knows how to do the roles of all the departments. On top of this, one person every 1.6 hours(1.6 seconds in Solana’s case) gets picked to be the CEO of the company(the Leader) and signs off on all the work from the other departments.
Now despite the picking of the CEO being pseudorandom, every employee in this company has an app on their computer where they can see who the next 10 CEOs are going to be. This way they can prepare their work ahead of time to hand off to the employee to start signing off on it before they become CEO, thereby allowing them to be more efficient and work faster. This is an analogy of what the Gulf Stream is. Gulf stream allows the nodes to know a small number of upcoming leaders so that they can begin accumulating transactions before the leader is assigned to create the blocks. Sea Level is best explained in how each department does its paperwork at the same time as all the other departments so that work doesn’t overlap at any point.
To summarize the explanations given above, Solana delegates tasks to different nodes on the network to optimize speed and efficiency while also timestamping all transactions to verify that they are correct. Given this framework, Solana is more decentralized, more scalable and more secure in comparison to a lot of other crypto projects.
SOL is the cryptocurrency used on the Solana blockchain for various purposes such as being burned to pay for fees, staked to become a node, and in the future used as a voting mechanism for Solana’s governance.
Solana has employees with backgrounds in many notable tech companies. The CEO Anatoly Yakovenko is a former Qualcomm employee and the long term vision of Solana is inspired by Anatoly’s experience at Qualcomm as he watched telecommunications technologies double in capability every year while he was there.
Solana has some solid partnerships already established, some notable ones to me are: Serum, Tether, Audius, Chainlink, Terra, Raydium and Bonfida. These are all solid projects and its great to see them join the Solana ecosystem, it’s important not to under hype nor overhype partnerships. Just because an ecosystem has a lot of partnerships, doesn’t mean it will succeed. If everyone uses the ERC-20 AUDIO and not the Solana blockchain, then Solana’s partnership with Audius isn’t that significant. A blockchain becomes successful if it is adopted for real world use, only time will tell which blockchains succeed in this realm.
Solana is a super interesting project, one that I find to be similar to Polkadot in terms of its complexity, ambition and scope of the project. On the surface, and from my understanding of the project, it looks to improve and innovate upon previous technologies in crypto that we see in projects like Bitcoin and Ethereum, and by doing this, Solana looks to be one of the most secure, scalable and efficient blockchains out there. It has a solid team with great backgrounds coming from many different tech companies, it has some great partnerships but more needs to be done in this realm as they are competing against ecosystems like Cardano which has partnerships with governments on the horizon. Overall, Solana looks like an amazing project and a solid long term investment but its important to be sceptical with ALL projects at this point in crypto as the DotCom crash of crypto is on the horizons and very few projects will survive. Whether Solana survives and beats projects like DOT and ADA is yet to be seen, they may all co exist together but nothing is certain in this industry.
-Scalable and efficient
-Solid team with a solid background
-Long term vision
-Solid projects in the ecosystem
-Well thought out
-Ecosystem doesn’t have as much hype as other ecosystems (DOT, ADA)
-Needs more adoption and a bigger community but this can easily be achieved if it out-scales all other projects
Overall, there appears to be a ton of positives for Solana and not a lot of drawbacks. Whether or not Solana will be a dominant player is yet to be proven but they are definitely looking to be one of the best blockchains for the coming decade. Keeps your eyes on this one and all projects launching in this ecosystem.
Thanks for reading and let me know your thoughts on Solana!