Blockchains require a massive amount of computing power to operate, and as decentralization becomes more popular, transactions take longer to process, commissions increase during peak loads, and assets can get stuck in the mempool. It seems as though there's no way of striking the right balance. Or is there?
The Solana blockchain appears to be free from all these issues. The block generation time is just 400 ms, and the network achieved 60,000 TPS (transactions per second) during its initial launch. Solana can theoretically process over 700,000 transactions per second, depending on several factors.
For comparison, Bitcoin had a TPS of 3.2 at the time of writing, Ethereum's was 12.4, and Solana's stood at 3,900. In short, this is a very fast blockchain, and it's incredibly cheap, too – commissions on transactions are only about one-hundredth of a cent.
How has this been achieved?
Solana was created to be a high-performance, secure, scalable network (remember the blockchain trilemma?) It is based on the proof-of-stake (PoS) consensus mechanism and proof-of-history (PoH).
PoS allows you to reduce computational resources; any network node owning coins is a potential validator. It also provides security and eliminates the possibility of a 51% attack (to find out more about proof-of-stake, check out our previous article). But PoS is nothing new, and it doesn't let you reach the kinds of network speeds Solana has on its own. It all comes down to the blockchain synchronization algorithm introduced by the creator of Solana, Anatoly Yakovenko.
So why would you need to sync a blockchain? Let's find out by looking at Bitcoin as an example.
On the Bitcoin network, blocks are sets of operations that haven't been organized. When miners create a new block, they add the local time and date. As a result, the time codes of nodes are different depending on the time zone where they were created, and this means the timestamps must then be additionally verified.
Summary: A walkie-talkie allows construction site supervisors to issue instructions to all workers simultaneously, telling them when to dig and when to stop. Without a walkie-talkie, they would have to approach each digger individually. As a result, workers might be excavating unnecessary areas while the supervisor is walking around the site.
With cryptocurrency, an equivalent situation happens when certain miners mine the same block simultaneously. One of them will be rejected, known as an orphan block. This can lead to undesirable conditions, such as double-spending attacks. If you increase the speed of block mining without thinking about synchronization, there will be more rejected blocks, and blockchains will then have to spend more resources on confirming generation times.
Solana has something called "decentralized clocks," where all network nodes are set simultaneously and work according to a schedule. Each event has a trusted timestamp and can be arranged as part of a verifiable sequence. As a result, the network checks many blocks simultaneously without examining each individually.
Another way of speeding up the network is through the Sealevel smart contract execution environment, which allows Solana to process thousands of transactions in parallel on all the cores available to the validator. Since transactions in Solana describe all the states that they will read and write during execution, Sealevel can identify all the non-overlapping transactions in a block and schedule their processing times.
Solana also has a multi-layer block propagation mechanism called Turbine. In Bitcoin's P2P architecture, a miner sends a new block to 8–10 peers, who then send it to their peers, and so on. Solana is more cunning – when the leader node sends data, it splits the block into 64 KB packets and transfers each packet to another validator.
Each validator then relays the packet to a group of peers known as a 'neighborhood.' In turn, the neighborhoods transmit the data to other ones that are nearby and 'below' them.
We end up with an enormous tree, allowing information to spread along its branches quickly.
Solana's SOL token is based on the SPL standard, analogous to ERC-20 on Ethereum. It is used to pay for all transactions and operations involving smart contracts. The token can also be staked by those who want to help maintain the network's security and receive part of the inflationary issuances as a reward. It is currently among the top 15 cryptocurrencies by market capitalization.
What else can it do, and what's the catch?
Thanks to its incorporation of LLVM (to put it simply, a framework for generating object code from any source code) and the Rust programming language, Solana is considered one of the best solutions for creating DeFi projects, smart contracts, and NFT solutions. This blockchain is faster and cheaper, making it easier for developers to port applications and protocols. The Degenerate Ape Academy NFT project, which was developed on Solana and sold tens of thousands of 'smooth-brained' NFT monkeys in just a few minutes, significantly boosted the price of SOL.
Not everything has gone so smoothly, however. In 2022 alone, Solana experienced several major performance issues, with a few occurring in a single month. They were caused by the desynchronization of the blockchain from real-time, errors, and an increase in the volume of "high-capacity transactions" (around 6 million per second). As a result, Solana is ranked 11th among cryptocurrencies at the time of writing after starting 2022 in 5th place.
The network's popularity also suffered due to a hacker attack in August, when attackers managed to withdraw funds from 9,000 wallets. An investigation showed that this resulted from centralized servers storing unencrypted seed phrases sent by the Slope Wallet mobile app, making them visible to anyone accessing the server. As a result, the price of SOL collapsed from almost USD 200 at the beginning of 2022 to USD 9 by the year's end.
Further to this, specific issues led to fairly strict requirements being put in place for validator hardware (CPUs with 12 cores and 24 threads, 128 GB memory, 2 TB NVMe, and internet speeds between 300 Mbps and 1 Gbps). This represented a sharp increase in the point of entry for 'regular' users who, even if they meet the minimum requirements, are unlikely to be able to compete with mining farms. This affects the growth rate of the network and its decentralization.
Most exciting projects on Solana
There are already a lot of projects on Solana, with many more in development, including trading interfaces, crypto exchanges, and profit aggregators:
Audius — decentralized music streaming platform. Unlike conventional streaming services, it allows musicians to work directly with the platform and choose how to monetize their work. It has a native token, AUDIO.
Maps.me — one of the best-known navigation applications. It recently entered the cryptocurrency world by launching a multi-currency wallet based on Solana inside the application. It can be used to access cashback programs, book accommodation, and make purchases inside the application.
Metaplex — an NFT platform based on Solana. It's simpler than its counterparts and more user-friendly for people who know little about NFTs or crypto. Minting can be done cheaply – potentially even for less than USD 1.
Solana is the fastest blockchain and has the lowest commissions. The blockchain has a great future if the project team can cope with the system stability issues. The potential is there.