Ethereum’s Silent Killer: Solana

In brief

  • Solana is trying to challenge Ethereum as the go-to blockchain for decentralized applications.
  • Its recent successes come down to products and partnerships, as well as tech innovations.
  • It was founded in 2017 by former Qualcomm executives.
  • Solana and projects investors include billionaire Chamath Palihapitiya’s Social Capital and Andreessen Horowitz

If you’re a crypto enthusiast, then you would have heard of Ethereum without a shadow of a doubt. Universally lauded as the ‘Queen of Cryptocurrencies’, this open-source blockchain has irrefutably carved a niche for itself in the blockchain community. But with the introduction of up-and-coming blockchain platforms like Solana, is it fair to assume that Ethereum will continue to lead the crypto space in the coming years?

Solana opened its blockchain to the public early this year. Like others competing for Ethereum’s crown — including Polkadot, Dfinity, and Cardano — Solana claims to offer a faster and more efficient alternative. But the project has stood out for its rapid execution and ability to create buzz, which has led its SOL token to soar and blue chip investors to rush in this summer with $314 million in funding.

The ecosystem has seen multiple positive developments such as Solana-based stable coin exchange Saber raising $7.7 million from high-profile investors including billionaire Chamath Palihapitiya’s Social Capital, Jump Capital, and the Solana Foundation. Beyond this, the blockchain’s developer, Solana Labs, raised $314.15 million in a private token sale round led by Andreessen Horowitz (a16z) and Polychain Capital.

Solana’s blockchain technology

The knock on Ethereum is that it’s slow and expensive. While its versatility and pioneering adoption of smart contract technology has made it wildly popular, the Ethereum blockchain currently tops out at 15 transactions per second and its “gas” fees soar to absurd levels when the crypto action heats up.

Ethereum 2.0 promises lower transaction fees and transaction speeds up to 100,000 TPS with the introduction of proof of work and sharding, however Ethereum has been known to fall behind on it’s promises

All of the would-be Ethereum killers promise a faster and cheaper experience. In Solana’s case that translates to around 50,000 transactions per second, and fees that add up to only pennies per transaction. The project also aspires to address a long-time problem, expressed in an axiom, that a blockchain can only excel in two of three attributes: decentralization, security and scalability.

Founder Anatoly Yakovenko claims Solana’s breakthrough comes as a result of “8 key innovations.”

The platform is highly decentralized and secure while simultaneously being extremely scalable. Solana managed to achieve this through its innovative PoH consensus algorithm.

The upshot is that Solana seems to have figured out a way to accelerate the consensus process that makes blockchain transactions reliable and immutable. Its process relies on something called “proof of history,” which allows the nodes that validate transactions to carry out their work at a faster clip. Here’s the more detailed breakdown from a Decrypt overview:

“Solana’s implementation of [what it calls Tower Consensus] enforces a global source of time across the blockchain through a second novel protocol known as Proof of History (PoH). This essentially provides a chronicle of previous events on the blockchain, ensuring that there’s a common record of what happened and when for permanent reference.

Price of Sol YTD. Sol’s market cap currently sits at around $20 billion

“Tower Consensus leverages this synchronized clock to reduce the processing power needed to verify transactions, since the timestamps of previous transactions no longer need to be computed. This helps Solana achieve a throughput that dwarfs most competitors.”

In practice, this novel system means that Solana has already added more blocks of transactions to its blockchain than those of Ethereum, Bitcoin, Polkadot, Algorand, and Cosmos combined. Meanwhile, Solana’s promise of a fast and secure blockchain has already resulted in a variety of applications for the upstart project.

Diving Deeper into Solana’s Tech

1. PoH consensus algorithm:

One of the most unique features of Solana is the integration of the ground-breaking Proof-of-History (PoH) consensus algorithm. PoH allows the blockchain to scale easily while running smoothly and quickly. It was based on the idea of developing a comprehensive historical record that could speed up the network without any risk to decentralization.

This consensus mechanism enables users to access a digital record that can prove the occurrence of an event during a specific moment in time. In essence, it works like a cryptographic clock that assigns a unique timestamp to each event (transaction) along with the data structure.

According to reports, Solana has an average block time of 400–800 milliseconds with an average transaction fee of 0.000005 SOL. Each validator on the network has its own cryptographic clock to keep track of events instead of waiting for other nodes to verify and validate transactions. This highly improves block time, making the network more efficient. Solana does not recur to off-chain or second layers whatsoever, making it one of the few, layer 1 blockchains capable of reaching over 1,000 TPS.

2. Turbine:

This is a block propagation protocol optimized to broadcast transaction shreds to all network nodes using User Datagram Protocol (UDP). It helps Solana achieve low-latency and loss tolerating connections between Internet applications.

3. Tower BTF:

The Tower BFT is quite similar to your run-of-the-mill PBFT (Practical Byzantine Fault Tolerance) consensus. It is a crucial mechanism in Solana, since it leverages the PoH cryptographic clock, enabling the network to reach an agreement without time delay.

4. Gulf Stream:

Gulf Stream refers to Solana’s mempool-less forwarding protocol. A mempool refers to a set of transactions submitted, but not yet processed by the network. Solana validators can manage a mempool size of 100,000. That means that with a network throughput of 50,000 TPS, a 100,000 transaction mempool is executed in a matter of seconds.

5. Solana Cluster:

This refers to a set of validators that work together. The primary purpose of these validators is to verify the output of untrusted and user-submitted programs. Moreover, it can be used whenever a user needs to preserve an immutable record of events or the programmatic interpretation of the events. Each cluster is a set of independently owned computers. They can track the possession of real-world assets, track which validators did meaningful work to keep the cluster running, and verify the output of user-submitted programs.

6. Sealevel:

This refers to a system that is based on the principle of parallel smart contract execution. The functionality of smart contracts in Solana is unlike that of other cryptocurrencies. Sealevel allows smart contracts to run side by side through the promotion of parallel execution of transactions within Solana’s single-layer blockchain. This prevents any disruptions and helps improve performance levels in the network.

7. Cloudbreak:

Using its Cloudbreak feature, the Solana system can access and interpret data simultaneously, using older versions as a backup.

8. Pipelining:

Pipelining is a hardware structure in Solana that is responsible for directing transaction information toward designated hardware. It is a popular reordering methodology in CPU design. It enables the creation of various stages for every hardware to complete its task in a process called a “pipeline of stages.”

9. Archivers:

These are hardware structures that work with pipelining and act as Solana’s distributed ledger store for petabytes of network data storage. They enable leader nodes to access network-based information at quicker rates.

The SBF Factor

As noted above, Solana is enjoying support on a number of fronts from FTX, the exchange launched by 29-year-old billionaire Sam Bankman-Fried — known in crypto circles as SBF.

The endorsements from SBF, who is also an investor in Solana, is significant because SBF is one of a handful of larger-than-life figures in an industry that worships them. Like Vitalik Buterin with Ethereum or Changpeng Zhao (CZ) at Binance, SBF has immense social media charisma to go with his crypto genius.

Products and partners

A big reason for Ethereum’s success is the number of other applications that people have built on top of it. These include games, financial services, media projects and, of course, other blockchain projects that rely on Ethereum’s ERC-20 protocol to maintain their own transaction records.

Solana’s eco-system is far smaller — as of June, it had around $1 billion in assets deposited as collateral compared to $59 billion for Ethereum. But the project is off to a promising start in terms of developer tools and applications. So far, these include a protocol for building NFT stores — Solana’s backers, like those for Ripple’s ledger, tout it as a cheaper and more environmentally conscious way to mint the non-fungible tokens (unique digital artifacts that are gaining popularity in the sports and art world).

The Bottom Line

Is Solana the true Ethereum killer? No, largely because the notion of an Ethereum killer is misguided to begin with. In the absence of a terrible misstep or a complete failure to implement its proof-of-stake ambitions — a step that should largely fix complaints about its speed — there is no reason to think anyone is going to displace Ethereum anytime soon. The platform is simply too popular and too entrenched to imagine the crypto world abandoning it in large numbers.

But that doesn’t mean there isn’t room for other blockchains to give Ethereum a serious run for its money in the long term. As it stands, Solana is one of several relative midgets aspiring to challenge the giant. But in these early days, Solana may have moved to the front of the pack of would-be rivals, thanks to technical excellence, shrewd partnerships and a charismatic champion.

If you’ve read this far, thank you! If you enjoyed the article or have any feedback feel free to leave a comment below.

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