Since the last couple of months, crypto Twitter has been buzzing with conversations around the Solana blockchain. From the marketing misstep to the latest funding round and the Solana Hackathon, the network has been getting attention from many.
While we are not certain if the highly anticipated Solana summer is coming, in this post, we will understand the Solana blockchain and look at why there is so much craze around it.
What is Solana Blockchain?
Solana is a layer-1 smart contracts platform founded in 2017 by Anatoly Yakovenko. The project was initially named Loom but was rebranded to Solana to avoid confusion with the Ethereum Layer 2 scaling solution, Loom Network.
The blockchain presents several unique features that enable it to tackle the scalability trilemma and ensure the network is decentralized and scalable while being highly secure.
Under the hood
Solana is a high-performance blockchain that utilizes Proof of History (PoH) as a critical component of its consensus mechanism. PoH is a sequence of computations that can provide a way to verify the passage of time between two events cryptographically. This happens by adding a verifiable delay function to the SHA 256 hash function, attaching timestamps to all the transactions, and helping track the order of each. In other L1 blockchains like Ethereum or Bitcoin, the transactions within the block are not placed a timely order.
Since it has a stateless architecture, contracts (programs) do not have to remember states, thereby reducing overall memory consumption. As there is no central memory system per contract, multiple transactions can be processed independently. In a stateful architecture, each transaction must wait until states are modified and remembered (read and write operations are serialized, i.e., they happen consecutively**).** This increases transaction throughput.
In a stateful architecture, however, each transaction is pending completion until states are modified and remembered, i.e., read and write operations are serialized. Ethereum has a stateful architecture.
The complete ‘state’ of Ethereum indicates all accounts and balances, as well as the collective memories of all smart contracts deployed and running in the EVM. Every finalized block on the chain has only one state, which is agreed upon by all participants in the network. That state is changed and updated as each new block is added to the chain.
The concept of ‘state’ makes Ethereum deterministic and trustful. Technically, a single ‘state’ also helps retrieve the history of transactions and more transparent transactions between different entities through logs. However, this concept increases overall costs as maintaining a state comes with serializing transactions (which changes the states). This reduces the transaction throughput.
Each node has a cryptographic clock that helps the network agree on the time and the order of the transactions; this allows nodes to organize transactions and further reduce the confirmation time across nodes as validators need to transmit lesser info, thus increasing throughput.
Staking and network validators
Validators take turns to become the leader and produce four blocks. The leader changes every 1.6 seconds. While anyone can become a validator (zero SOL needed to run a node), the probability of becoming one is directly proportional to the SOL staked.
Once a node occupies a leader position, they add multiple transactions into the blocks. Then, they pass the blocks to a group of validators working together to maintain the ledger’s integrity, known as Solana clusters. These nodes validate the blocks based on timestamps and then push them to the larger network.
Currently, over 650 active validators are running Solana nodes, with over 67% of SOL staked into the network. The mechanism burns 100% of transaction fees generated from validating transactions with plans to incentivize the validators by distributing at least 50% of it. Unfortunately, Solana needs one of the most expensive setups to run a node, and it often becomes difficult for an average user to participate in the consensus mechanism.
Solana produces a block every 400 milliseconds and can process over 60K transactions per second, making it the fastest L1 blockchain.
Achieving this feat requires implementing optimizations and innovative technologies; as a result, making a breakthrough and building the next phase in blockchain development.
Proof of History (PoH): Agreement on time when a transaction happens is a problem that is hard enough for centralized systems. But, when it comes to decentralized applications, nodes in the network cannot trust an external time source. Solana solves this by taking a timestamp by implementing a verifying delay function (VDF) to align transactions within the blocks based on time.
Tower BFT: A custom implementation of Practical Byzantine Fault Tolerance (PBFT). BFT is a condition in distributed networks where components may fail without the network realizing it. Solana ensures the liveness of the network and leverages the PoH clock before the consensus.
Turbine: Scalability trilemma is one of the most common challenges among blockchains. Turbine is a block propagation protocol that reduces the time taken to deliver data to all the nodes. It does so by breaking the larger message into smaller packets sent to validators. The first set of validators are responsible for delivering the packets to their peers (neighbourhoods). The protocol heavily borrows from BitTorrent with little technical differentiation.
Gulf Stream: Mempool is a set of pending transactions on the network to be processed. Gulfstream is a custom-built mempool management solution to ensure high performance. Validators in the Solana network are appointed as leaders, and the order of leaders is defined well in advance. The network takes advantage of this and sends the transactions to leaders ahead of time to reduce confirmation times and mempool pressure on validators from unconfirmed transactions.
Sealevel: In EVM and EOS’s WASM-based runtimes are single-threaded, meaning one contract at a time modifies the blockchain state, whereas the runtime on Solana can process thousands of contracts in parallel. In addition, Solana describes all the conditions of the contract while executing, allowing for non-overlapping transactions to run simultaneously.
Pipelining: To ensure faster confirmation times, Solana leverages a CPU optimizing technique known as pipelining. It refers to a stream of input data processed in a sequence of steps to ensure consistency and completion of finality in the faster possible time. The pipelining mechanism used on Solana is called Transaction Processing Unit (TPU)
CloudBreak: Performance issues often occur due to lack of memory and inadequate speed, limiting hardware usage. CloudBreak is a design solution to ensure 100% hardware utilization. It optimizes for concurrent reads and writes speeds across a configuration of SSDs. Each additional disk adds storage capacity to on-chain programs while increasing the number of reads and writes programs can perform when executing.
Archivers: In its total capacity, Solana will generate 4 petabytes of data every year. This means a mountainous task for validators to maintain the database. Solana uses a modified version of Proof of Replication (introduced by Filecoin in 2017) to ensure the data is broken into pieces and offloaded from validators, and stored in encrypted nodes known as Archivers. Archivers do not participate in consenses and have low system requirements.
With the latest funding, Solana is pushing hard to bring the best projects to the network and enable devs to build native applications through grants, hackathons, and easy-to-use tools.
The current TVL stands at over $500M with a peak of $1B before the market crash. Serum and Raydium attract the most TVL and offer farming, staking, exchange features to their users and are deeply integrated with several budding applications on the blockchain.
The ecosystem is radically evolving with hundreds of projects in various subsectors, including DEXs, lending, infra, insurance, options, and IDO platforms currently in the dev or the testnet phase.
It has a long way to go before it starts eating away market share from Ethereum and Polygon networks, but the increasing focus by the VC community to fund Solana projects may accelerate the process.
But not all is good for the dev community. Solana is a non-EVM-compatible chain, making it difficult for Ethereum based applications to migrate to utilize the high throughput. The network also uses Rust which is growing in popularity but not as common as Solidity.
The future ahead
Solana has gained in popularity in 2021, and the network is pushing hard to build a native DeFi ecosystem and allow dapps to leverage the top-of-the-line technology features. Solana may face a tough battle from L2 solutions like polygon, Arbitrum, zkSync, which offer high throughput and makes Ethereum based apps to port natively with minimal code changes.
A lot depends on ETH 2.0; if it fails to deliver, dapps and users may move to Solana. However, one thing is for certain that the multichain future that we dream of is closer.
Staking economy stats:
Top headlines from PoS world:
RenVM has just announced its asset bridge with Solana enabling users to burn and mint assets on the latter. Users will now be able to bring Bitcoin (renBTC), Bitcoin Cash (renBCH), DigiByte (renDGB), Dogecoin (renDOGE), Terra, (renLUNA), Zcash (renZEC), and Filecoin (renFIL).
C- Chain or Contract Chain is the default smart contract blockchain on Avalanche and allows creating any Ethereum-compatible smart contracts. Gate.io and KuCoin became the first centralized exchanges to integrate the functionality and enable deposits and withdraws, making transactions faster and cheaper.
The Polkadot v0.9.5 upgrade is at a high priority as it secures the release of parachains on Kusama. It entails new staking limits, updating the pvf heap page limit, among other changes. Validators are to update their client immediately.
The mandatory upgrade entails setting a minimal base fee of 5% for all validators on the network and 0% fee for new validators for 100 epochs; announces changes in the core EPoS mechanisms; and reduces minimum delegation from 1000 to 100.
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