Solana’s Mainnet Beta ceased producing blocks on the 30th of April 2022, which led to a 7-hour outage on the blockchain caused by stalled consensus. Solana is a blockchain I follow closely, and this outage is not the first of its kind. Solana is a blockchain that boasts of being the fastest and cheapest blockchain in the ecosystem, with transaction volumes of up to 710,000 transactions per second at an average cost of $0.00025. This article will overview Solana, its consensus mechanism, its ecosystem, and some of its issues.
What is Solana?
Initially founded by Anatoly Yakovenko, a former Qualcomm employee, in 2017 after publishing a whitepaper on a unique blockchain consensus mechanism known as Proof-of-history. Solana is a Layer-1 decentralized high-performance blockchain that allows developers to quickly build scalable, efficient, and user-friendly decentralized applications (Dapps). Thanks to its unique consensus, its scalability allows for fast transaction speeds at lower transaction fees. It also acts as a platform for thousands of projects (NFTs, DeFi, GameFi, and DAO) in the blockchain ecosystem.
Solana’s Consensus Mechanism
What is a Blockchain Consensus Mechanism?
A blockchain consensus mechanism can be defined as the protocols required to meet an agreement on the decentralized network. These protocols can affect the state of data values on the blockchain, validation of transactions, and smart contracts. They also help in maintaining the blockchain’s security. An example of an active blockchain consensus mechanism is the Proof-of-work mechanism used by Ethereum and Bitcoin.
Solana’s Proof-of-History
Solana uses a consensus known as Proof-of-History. Following it’s whitepaper, it is a modified version of Proof-of-stake. Proof-of-history is a sequence of computation that records the time passed between two events and verifies it without communicating with numerous validator nodes (think of them as computers). Unlike other blockchains where validator nodes verify the order of events on the blockchain through local timestamps, which inevitably leads to more time usage for transaction verification, Solana uses a trustless consensus system that serves as the generally verifiable timestamp across the network.
It does this through a cryptographic protocol known as “Verifiable Delay Function”. By hashing every transaction or event, it assigns a unique count and hash to each transaction and executes it in a sequence, and by periodically using the output as the following transaction’s input it creates a “history of transactions” that can serve as a form of timestamp that the blockchain can use to determine time passed between events.
Moreover, it acts as a form of a cryptographic clock for the blockchain and its validators. This ultimately leads to a reduction in the node’s workload leading to a faster, lighter, and more efficient blockchain because validator nodes can produce blocks without confirming with the entire network.
The Hick in Solana
Solana has shown to have congestion issues which can be classified as usual for blockchains due to a recurrence of high transaction volumes. But the hick with Solana is that it has also had constant outages, which is a problem for a “decentralized network”. Some say it is a result of its compromise for stability with scalability prompting challenges in the way it handles critical consensus mechanisms when the transactions stream on the blockchain are swamped.
The recent crackdown on the blockchain resulted from an inflow of transactions caused by a swarm of bots trying to mint a new NFT through the Candy Machine Program. This led to the network validating around 6 million transactions per second which surpassed the initial traffic Validator nodes could handle, thus halting consensus and block production. This led to a restart of the network through human-aided intervention.
Will this happen again and should you be worried?
Solana has actively identified its problems and is working on implementing solutions. Following their recent report,they plan to implement new protocols that will aid communication between nodes and optimize data ingestion by appending QUIC - an asynchronous communication protocol built by Google. They also plan to augment their transaction prioritization by halting the first-come-first-serve routine and replacing it with a “stake-weighted transaction” model as well as an “arbitrary fee-based transaction” model for the swift execution of “urgent” transactions.
They are revamping their fee, transaction, and communication structure. While this is great, it is pretty ironic for Solana to initiate a new form of fee prioritization. Like every other “Ethereum Killer”, Solana boasts of solving the scalability issue in the blockchain trilemma and being able to handle faster transactions at a lower gas fee.
One thing to note is that Solana still refers to its mainnet as “Beta” so bugs and errors are still liable to be found on the network, which gives an idea of whether this will happen again. You can follow the status of the blockchain’s servers (mainnet RPC nodes, testnet, devnet etc) here.
Solana’s Native Token $SOL
Solana’s native asset is referred to as “SOL”. It currently has a liquid supply of 527 Million according to Messari’s metrics. The Solana token can be used to pay for transaction fees on the blockchain and can also be staked for governance purposes or assigned to validators to secure the network. By doing this, stakers earn an inflation reward of up to 8% annually.
Solana’s Ecosystem
Solana houses many blockchain projects ranging from NFTs to DeFi projects etc. It is also important to note that as an “Ethereum killer”, Solana is not EVM-compatible (Ethereum Virtual Machine), unlike other blockchains like Polygon and Fantom Opera.
However, it allows developers to build smart contracts on the blockchain using programming languages like Rust and C. There is also news of Neon Labs bringing EVM compatibility to Solana by allowing Ethereum smart contracts to run on Solana, possibly in a bid to escape gas fees. How truly ironic. A look into some worthwhile projects utilized in the Solana ecosystem:
DeFi
Solana has a TVL (Total Value locked) of $5.71 billion, according to DefiLama. This metric shows how much crypto assets are being staked in Solana’s liquidity pool.
Solana Pay: Solana Pay is an open and free-to-use payments framework. It is a direct merchant-to-client system that utilizes Solana's speed and low transaction fee while also being energy efficient. It claims to be the potential “Visa of the Blockchain ecosystem”.
Saber: Saber is a cross-chain liquidity network powered by Solana. It allows users to trade stable pairs at low slippage and minimal fees comfortably and allows liquidity providers to earn from transaction fees and liquidity incentives.
Raydium: Raydium is a Decentralized exchange platform built on the Solana blockchain. It enables users to swap tokens at breakneck speeds and enjoy yields through staking and farms. It also possesses other features like a launchpad for new Solana-based projects and NFTs.
Other Defi projects include: Crema Finance, Mercurial, etc.
NFTs
With Solana’s relatively inexpensive gas fees at play, it acts as a haven for creators looking to escape overly high gas fees on the Ethereum network.
Magic Eden: Magic Eden is an NFT marketplace built on the Solana blockchain. It enables users a smooth experience when minting their NFTs with a 0% listing fee and a 2% transaction fee. It also possesses a launchpad to allow creators to easily mint their NFT collections without knowing how to interact with smart contracts directly.
Solsea: This is the first Open NFT marketplace built on Solana. One of its many perks asides to help users mint and sell their NFTs on the blockchain. It allows users to stake their native token $AART and enjoy discounts on the marketplace fees for sale transactions.
Other NFT projects include Solanart, Alpha Art, etc.
Games and Metaverse
The metaverse is one of the most discussed aspects of the web3 world. There are projects on Solana built to further the concept.
Realy: Realy is the first live-to-earn metaverse on Solana. It is a game with 3D graphics built with unreal engine. It possesses its token economy where players can earn its native token $REAL by completing daily tasks in the game, own lands and houses in its idea of a “metaverse”, own NFTs, and borrow them as well as stake the native tokens to earn rewards.
Synergy Lands: Synergy Lands is a blockchain multiplayer RPG game set in a fantasy land divided into four natural elements; water, fire, air, and earth. This game allows players to own private land and enables the collection and trading of NFTs between players.
Other Gaming and Metaverse Projects include Hogylmpics, Naga Kingdom, etc.
Numerous other projects are constantly being furthered within the Solana ecosystem, and devs will still deploy many more.
Thought Bubble and Conclusion
The blockchain ecosystem is still developing, and we have yet to scratch the surface of its true potential. Solana has proven to be a reliable blockchain for various blockchain projects regardless of its breakdowns now and then. What is encouraging is that the platform is learning from real-world on-demand scenarios and how to respond to them appropriately. The change in the fee structure might put some Solana enthusiasts on edge, but it does seem to be a step in the right direction.
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