Decentralized applications (DApps) are one of the most important use cases of blockchain technology. We have seen how DApps have evolved significantly in recent years, creating games like Cryptokitties or becoming the foundation of DeFi. However, blockchains like Ethereum are not prepared to support a large number of transactions, generating network congestion. Solana (SOL) is a blockchain designed exclusively for DApps that aims to be an alternative to Ethereum.
What is Solana (SOL)?
It is a new generation blockchain project based on open source code that seeks to drive the development of next-generation DApps. Solana (SOL) aims to offer a highly scalable, secure and as decentralized as possible platform. It also wants to potentially have thousands of nodes without the need for expensive hardware that consumes a lot of energy.
Solana is based on third-generation Proof-of-Stake (PoS) consensus. It integrates a unique mechanism to create a trust and security system to determine the timing of a transaction called Proof-of-History (PoH).
Solana’s blockchain technology has been developed from scratch to be especially scalable. The developers want to demonstrate that when different algorithms are combined to generate a blockchain, a system is created that reduces the bottleneck that ends up saturating the network. A high-performance network is achieved even when a large volume of transactions are generated.
The Solana Labs project, which brings Solana to life, was founded in 2017 by Anatoly Yakovenko. His proposal for this blockchain is to create a new transaction verification system called Proof-of-History (PoH) that provides the capacity to support thousands of transactions per second. For its funding, an ICO was launched in 2017 that managed to raise more than 25 million dollars. Solana’s mainnet was launched in March 2020 and currently operates in beta phase.
What is SOL?
Like any other blockchain, Solana has a native cryptocurrency called SOL that functions as a utility token. The SOL token is necessary for paying transaction fees and for deploying and interacting with smart contracts.
SOL tokens are burned in an integrated deflationary process. Additionally, SOL holders can become network validators. At the same time, SOL makes use of the SPL protocol, a token standard of the Solana blockchain similar to ERC-20 in Ethereum.
There are two use cases for the SOL token:
- It allows paying transaction fees made on the network or for smart contracts
- Performing staking of the tokens thanks to the proof-of-stake consensus mechanism
Currently, different DApps are being developed within Solana that develop new uses for the SOL token. Chainvote is developing a DeFi voting mechanism that enables corporate governance using SOL tokens to conduct votes.
Solana Features
What is Proof-of-History (PoH)
Any transaction or event on the Solana blockchain generates a hash based on the SHA256 encryption algorithm. This algorithm takes an input and generates a unique output that is very difficult to predict. What Solana does is use the output hash of one transaction and uses it as input for the next hash. What this does is introduce the order of transactions into the next output.
This hash mechanism generates a long and uninterrupted chain of transactions. This allows for generating a clear and verifiable order of transactions that a validator then adds to a block. Through this mechanism, it is no longer necessary to generate a timestamp as happens in Bitcoin, Ethereum, Litecoin, etc.
Each hash in turn requires a certain amount of time to be completed. This element also allows validators to verify, very quickly and easily, how much time has passed.
Proof-of-History (PoH) therefore presents major differences compared to the PoW consensus of Bitcoin or Ethereum. These two cryptocurrencies aggregate transactions in blocks without the slightest order. What miners in PoW do is add a timestamp, which is the time and date when the block was generated, according to each blockchain’s clock. The timestamp can vary according to the node and even be false, which forces nodes to verify that the timestamp is valid.
Through the transaction ordering process in hashes, validators have less information to process in each block. Using a hashed version of the last state of a transaction reduces confirmation times for new blocks.
It should be noted that PoH is not properly a consensus mechanism, but a solution that saves time and resources to confirm transactions. It is really a complement that is added to the proof-of-stake consensus that simplifies the random selection of the next validator. It allows nodes to validate the order of transactions in shorter time periods, making the network faster.
What is Turbine?
Block propagation protocol that facilitates the distribution of information to nodes, helping to maintain consensus. It must be a fast process, since blocks in Solana are generated every half second, approximately. It is required that the block propagation process be faster than block generation. What Turbine does is divide the problem. Specifically, what it does is divide the block information into small sections that are distributed across the network. These “chunks” are reconstructed by the nodes according to their own states.
The entire block is not actually sent, only a portion of the block information and each node must reconstruct it. If the node does not have the information to “reconstruct” the block, it can request it from the rest of the network. This process is done in parallel, thus reducing bandwidth consumption, maximizing speed and thereby managing to maintain consensus.
What is Gulf Stream
It is a caching protocol for network transactions. It is responsible for receiving the transaction and sending it to all nodes, prioritizing generator nodes. It allows all nodes in the network to access the information necessary for block recreation. Solana creates blocks through an election based on a quorum that has the power to generate a block and broadcast it to the network.
But the role of generator nodes is not only to create blocks, but also to be selectors of the next group of validator nodes. This allows knowing at all times which nodes will generate the next block. It allows nodes to receive transactions and route them to the next generators. A mechanism that allows reducing the generation time of the next block.
System manipulations are avoided through a transaction lifetime of only 24 seconds. When a transaction is not confirmed within this time frame, one outcome can be generated: a transaction failure and the need to resend the transaction. This situation of failure in transaction validation time can only occur if Solana’s network transaction capacity were to be exceeded.
What is Sealevel?
Solana offers the ability to parallelize transaction validation and the ability to execute smart contracts. The idea of this new blockchain is to compete with Ethereum, especially in terms of DApps and DeFi support.
Solana’s smart contracts make use of the C language and Rust, to create a unique smart contract programming ecosystem. This offers great parallelization capability for smart contract execution. Sealevel is the name that Solana developers have given to these capabilities. Through this function, the ability to read, execute and write instructions in parallel is enabled within Solana’s smart contract execution layer. A smart contract can execute multiple actions simultaneously, while in Ethereum and EOS only one action can be performed at a time.
What Sealevel allows Solana is greater scalability than other blockchain networks. It could reach, with the integration of sufficient high-performance nodes, support for up to 500,000 transactions per second. Additionally, it eliminates the need for a second layer to improve scalability.
What is Tower BFT?
Solana’s protocol against Byzantine fault tolerance that combines with PoH to help maintain secure consensus and network decentralization. It is an evolution of “Practical Byzantine Fault Tolerance” (PBFT), which is a Byzantine fault tolerance protocol, highly recognized within distributed computing.
Tower BFT functions as a “judge” within the timestamp system that runs on the Solana network. A synchronized clock is used among all nodes that serves as a checkpoint, verification and acceptance point for the work performed by the nodes. This allows creating a decentralized consensus on the work and its acceptance by the network. As long as the work respects the consensus rules of the Solana network.
This mechanism derived from PBFT is really fast and has also been optimized by Solana developers. Tower BFT and PoH are elements that allow Solana to have very low generation times and maintain consensus.
How Solana Works?
This project makes use of Proof-of-Stake (PoS) consensus with a complement called “Tower CBFT”. Through this mechanism, distributed networks are allowed to reach a consensus that prevents the Byzantine Generals attack (BFT).
Solana’s implementation of BFT resistance adds a global time source to the blockchain through a second novel protocol called Proof-of-History (PoH).
Tower BFT makes use of this synchronized clock to reduce processing power requirements for verifying transactions. This is possible because there is no need to calculate the timestamp of previous transactions. A mechanism that allows Solana to have superior performance compared to other blockchains.
It’s not the only difference between Solana and other blockchains. The ability to parallelize transactions is also added, which is called Sealevel. This mechanism allows the execution of smart contracts in parallel, thus optimizing the need for resources and reducing times. Solana allows horizontal scaling on GPU and SSD, enabling the platform to scale to meet network demand.
Additionally, Solana eliminates the mempool that is used in Bitcoin, Ethereum and other cryptocurrencies. What is done is distribute transactions among validators, even before they have finished validating the previous batch of transactions. Thanks to this, confirmation speed is maximized and the number of transactions that can be handled simultaneously and in parallel is increased. This element is called “Gulf Stream”.
What differentiates Solana from other blockchains?
The main problem with current blockchains using proof-of-work consensus is that they support very few transactions per second. Bitcoin supports between 5-8 transactions per second and Ethereum supports between 12-20 transactions per second. When these figures are exceeded, we enter network congestion, which is nothing more than more transactions than can be processed. This leads to increases in transaction fees so they are validated before the rest of the issued transactions.
Solana differs from other blockchains by offering, in theory, greater processing capacity. The developers indicate that the figure of 50,000 transactions per second can be exceeded. Meeting this figure would mean it would be the fastest and most powerful blockchain currently.
It’s not the only difference between Solana and other cryptocurrencies. Solana generates a block at intervals of 400-800 milliseconds. Bitcoin generates a block every 10 minutes (more or less) and Ethereum every 20 seconds (more or less). Transaction fees on Solana are also reduced, going to an average fee of 0.000005 SOL. These aspects would potentially allow developing any DApp, DeFi solution or any game on this blockchain.
All this is done without needing to resort to a second layer, as is the case with Lightning Network for Bitcoin, a Layer 2 solution. Additionally, blockchain fragmentation into parts is not necessary either, as proposed by Ethereum 2.0 or Polkadot, among others.
Solana also allows anyone to enter as a network validator and help protect the blockchain. It is a permissionless system, but requires minimum hardware that is described on the project’s own website. Currently there are already more than 1,000 network validator nodes.
Projects based on Solana
There are several projects that are already developing solutions within Solana. There are many DApp and DeFi developers due to the great theoretical processing capacity it offers. Some of the most interesting solutions being built on Solana are:
- O3Swap: Cross-chain aggregation protocol that offers compatibility with Ethereum, Binance Smart Chain, NEO and Huobi Eco.
- SolStarter: IDO launch platform for projects based on Solana.
- Arweave: A decentralized data storage protocol that wants to offer permanent and redundant file storage.
- Oxigen: Main DeFi brokerage protocol that allows users to extract value from their idle assets.
Solana Roadmap
The project began its development in 2017 and it wasn’t until March 2020 that the mainnet beta was launched. Solana currently lacks a clear roadmap, so we don’t know when the mainnet will stop being in beta phase. Although it identifies itself as being in beta phase, the network is ready to support transactions and smart contracts. The beta identification refers to possible minor errors or setbacks that may occur.
Final words about Solana
The proposal that Solana offers to guarantee good scalability and be able to process a large number of transactions per second seems promising. If its Proof-of-Stake mechanism combined with the Proof-of-History mechanism proves to be secure, it’s possible that many others will choose to use it. Eliminating the need to “break” the blockchain into smaller and manageable parts and adding a layer that watches over everything, like a police officer, seems to add elements that could end up causing failures.
Solana is just one of the many solutions currently being developed with the intention of offering scalability. After verifying that cryptocurrencies have a future and are adopted by users, now comes the process of improving them. It should be remembered that Bitcoin was launched in 2009 and Ethereum was deployed in 2015. We’re talking about very new technologies from which we are discovering all the possibilities they can offer us.
