As cryptocurrency and blockchain become more prevalent in our everyday lives, both developers and consumers are in need of networks that can scale efficiently and at a low cost. That’s why the blockchain platform Solana was created. In this article, the first of our Blockchain Protocols series, we’ll provide an introduction to Solana, discuss why the protocol has been successful thus far, review some of its top projects, and address the challenges it faces ahead.
What Is Solana?
In a November 2017 whitepaper, Russian computer engineer Anatoly Yakovenko proposed a mechanism called Proof-of-History that would soon lead to Solana’s creation. Proof-of-History is based on the idea that having a reliable clock between computers in a blockchain network makes synchronization simple and results in high transactions per second (or TPS).
Ultimately, Solana is a blockchain platform designed to address two of the most concerning issues in Web3: security and scalability. When co-founder Yakovenko initially built Solana, his goal was to scale throughput while maintaining low costs and ensuring an energy-efficient network.
The greatest roadblock with competitor blockchains like Ethereum is that they are expensive to use, energy-intensive, and struggle to scale. The upcoming September 15, 2022 Ethereum Merge will help with energy use, but Ethereum will still rely on Layer 2 scaling solutions to actually scale.
The Solana team wanted to create a network that could achieve full scalability on its own, without the need for a Layer 2 solution.
Why Is Solana Successful?
According to CoinDesk, active wallets on Solana grew 58% this year with over 32M active wallets in June 2022. Solana is up to over $1.53B in total value locked (TVL). It may not be Solana Summer anymore, but Solana is still growing like wildfire. There’s a few reasons why.
Solana is Speedy, Cheap, and Energy-Efficient
With an average of 2,000 transactions per second (TPS) and a theoretical maximum of 710,000 TPS, Solana is one of the fastest blockchains. This is far better than Bitcoin and Ethereum’s 15 TPS capability.
Boasting an average cost of only $0.00025 per transaction, Solana is affordable for everyone.
Solana’s low speed and cost make it particularly suitable for NFT trading, blockchain video games, or simply sending SOL to a friend to pay for a meal. In comparison, Ethereum’s gas fees range from $5 to $250 depending on network congestion. Ethereum gas fees have even risen up to $14,000 per transaction due to the Otherside NFT mint.
Blockchains’ impact on the environment is a huge concern amongst scientists and environmentalists alike. While Solana may not be called “The Green Blockchain” like Algorand, Solana is regarded as one of the leaders regarding eco-friendly blockchains.
According to a report from blockchain analytics platform Nansen, Solana is “extremely energy efficient” and each Solana transaction consumes less energy than 3 Google searches. The Solana Foundation also seeks to keep the network carbon neutral.
Solana Composability and Top Projects
Like any program, Solana went through multiple iterations. In fact, it was originally called Loom, but Yakovenko renamed it to Solana after a beach he used to surf at in California.
In a similar switcheroo, Solana was also originally built to run on the programming language C. But Yakovenko’s co-worker Greg Fitzgerald encouraged him to reimplement Solana in Rust because Rust would improve the software’s productivity. Eventually, the project was then extended to allow for programming in C anyways.
Despite Solana’s name and language identity crisis, Yakovenko’s team was certain about one thing: Solana would not be natively compatible with the Ethereum Virtual Machine (EVM). This means that each dApp needs to be built from the ground up. To incentivize developers to build apps on Solana, Solana Labs has been hosting popular hackathons around the globe.
Yakovenko’s vision of a composable, scalable network came true. On Solana, developers and users don’t need to deal with multiple shards or Layer 2 scaling solutions. Combined with the cheap costs and energy-efficient blockchain, Solana’s composability has led many developers to choose to build projects on top of Solana.
In April 2022, NFT marketplace OpenSea notably activated support for Solana-based NFTs. Top projects include Okay Bears, which has done over 2M SOL in trading volume, and DeGods, which has done over 880,000 SOL in trading volume.
Problems with Solana
At this point, Solana has gotten the reputation of being as reliable as coffee shop Wi-Fi. It works most of the time, but when too many people are using it, it shuts down.
In September 2021, Solana experienced instability that resulted in a 17-hour outage due to a large increase in transaction load which peaked at 400,000 TPS. According to the Solana status update account, the heavy flood of transactions overloaded the processing queue which caused some nodes to go offline. Then, in May 2022, Solana had a 7-hour shortage due to a bot-storm trying to buy NFTs.
On top of the reliability issues, Solana has received criticism for its centralization. In June 2021, Solana sold $314M worth of SOL tokens in a private sale to investors Andreessen Horowitz, Polychain Capital, Alameda Research, and more. As of February 2022, Solana had approximately 72% fewer nodes (1,469) compared to Ethereum (10,472). When it comes to decentralization, more nodes are almost always better as there is less of a chance of an outage.
Solana may be ascending, but it still has a ways to go.
The Future of Solana
On June 22, 2022, the Solana Foundation announced they were launching a mobile phone called The Saga, built using the Solana network. The Saga would run on the Solana Mobile Stack, an open-source software kit for Android enabling secure Solana-native Android apps.
Then on August 16, 2022, Jump Crypto announced they will be working with the Solana Foundation on a 24-month project to develop a new open-source validator client for Solana in an effort to boost the speed and reliability of the network.
“We have seen first-hand the impact that improving a network’s speed and efficiency can have on an entire financial system. Now, given the relatively slow speeds and unreliability of blockchain networks, an incredible opportunity exists to transform the functionality and efficacy of these networks. We are excited to apply our proven technologies to encourage widespread adoption, creating endless possibilities and driving real change in the world.” – Kevin Bowers, Chief Science Officer at Jump Trading.
Solana’s Summer Camp Hackathon also finished last week with winners scheduled to be announced on September 8th, 2022. Over $5M in prizes will be given out to hackers from around the globe.
With a $1.53B TVL, rapid growth, and support from venture capital’s biggest firms, Solana is a must-watch blockchain in the coming years.