What is Solana and How Is It Different from other Layer-1 Blockchains?
The need to scale up crypto and blockchain space has brought about layer 1 solutions, which is the underlying main blockchain architecture based on the need to improve the base protocol itself. The aim is to make the overall system more scalable. Bitcoin is the layer -1 network, which reflects how a layer-1 chain is important. One of the most important pros of a layer-1 solution is that you don’t need to add anything on top of the existing architecture. But the problem with most Layer-1 solutions is the low speed and high cost of transactions involved. This is what inspired Solana (SOL) Blockchain development by a team of engineers with deep experience in decentralized blockchain and GPU optimization.
Solana blockchain was introduced into the market in 2017. Its main goal was to help in scaling censorship resistance, hence support an order of magnitude increase in transaction throughput. With its native scalability, Solana was meant to be faster and more cost-effective than its more established layer-1 counterparts (e.g. Bitcoin and Ethereum). The article explains what Solana is and what makes it different from other layer-1 Blockchains like Bitcoin and Ethereum.
TL;DR While the older layer-1 blockchain networks such as Bitcoin and Ethereum all offer single-threaded computers with no guarantee of transaction conflict is executed in parallel, Solana manages to unlock concurrent transactions with no element of conflict or confusion, hence speeding up transactions while maintaining security. Through proof-of-History, Solana ensures high speed, low latency, and inexpensive transactions. Note that all these take place on layer-1 without sharding or adding layer-2 as it has been tried on other networks.
What is Solana Blockchain?
Solana describes itself as “a fast, secure and censorship-resistant blockchain providing the open infrastructure required for global adoption.”
What does this mean? Solana Blockchain has been designed with native scalability, which was meant to solve the problem of slow transactions and high costs associated with its established layer-1 counterparts such as Bitcoin and Ethereum. For example, Solana, built as a decentralized protocol, incorporates an innovative Proof-of-History (PoH) timing formula, often implemented well in advance, to facilitate its proof-of-stake (PoS) protocol structure.
Solana’s Native Scalability
Solana Blockchain was designed to solve the endemic scalability problem that plagued the world of cryptocurrency. It was designed to match the performance of a single node because most of the preceding blockchain ledgers and decentralized payment networks only provide security to users. However, the more emphasis these protocols put on the idea of decentralized security, the longer the verification of new transactions takes. Taking into account that these networks hosts the largest number of transactions and the number of users continues to soar each day, they face the challenge of scalability as they work to preserve the security and decentralization principles.
The concept of scalability and throughput is measured by the number of transactions that a protocol can handle at ago, often referred to as transaction per second (TPS). A platform that can handle a high volume of transactions more efficiently is what everyone would desire to work with, in addition to the security of the transactions.
The reasons are simple…
Blockchain network is designed on the principle that each node (or computer) processing transactions on it has its own internal clock from which it operates. There are thousands of nodes spread across the world, and the obvious experience is to have some discrepancies with local system clocks. The problem escalates when the decentralized network needs to reach a consensus on transactions that have taken place, and in which order. At this point, both Proof-of-Work (PoW) and Proof-of-Stake (PoS) experience the timestamp synchronization problem, consequently delaying consensus.
The nexus between the time timestamping stage and the local system clock affects other nodes’ processes and speed of verifying the transactions. Moreover, messages about their confirmation or rejection are also timestamped. The process causes some sort of discrepancy between local system clocks, which may pave way for attacks where bad actors can try to take over a crypto network using fake transaction broadcasts that closely approximate real timestamps. A good example is a possible emergence of ‘fake stake’ attacks in the case of PoS or Denial-of-Service (DoS) attacks in the case of PoW. Pioneer blockchain protocols like Bitcoin and Ethereum have suffered this problem, and Solana is striving to solve the problem by ensuring that all transactions don’t face the risk of manipulation.
More importantly, Solana synchronizes all the respective clocks across its decentralized network. Therefore it ensures transactions take lesser time to verify since individual nodes do not have to dedicate so much processing power toward verifying various timestamps from users. The synchronization helps the Solana network optimize for speed, which makes it faster with higher scalability. In short, it enables efficient energy consumption and higher security.
Comparatively, Solana Blockchain is estimated to enable a theoretical synchronization time of 65,000 transactions per second across nodes. Although some have disputed the concept because there’s no real-world proof except for the testnet results, it’s reporting to have achieved 50,000 transactions per second, a speed that is still groundbreaking in the blockchain industry. So far, Bitcoin and Ethereum 1.0 can only support only 4.6 and 30 transactions per second respectively. Based on Moore’s Law, Solana is expected to double in capacity every two years with improvements in hardware and bandwidth. From this theoretical perspective, we expect Solana will get faster as the speed of computers increase. This is a large improvement from other layer-1 chains that are considered static in terms of speed.
Solana’s Proof-of-Stake (PoS) and Proof-of-History (PoH)
Proof-of-Stake (PoS)
Most developers in the blockchain industry have proposed layer 2 and sharding for scaling the existing layer-1 solutions (e.g. Bitcoin, Ethereum, and Ripple). But this approach is complex and cumbersome to users. Furthermore, most of these blockchain networks have ignored the role of time and its impact on the transaction. To solve this challenge, Solana has approached the issue differently. They have tried to reduce the complexity with Proof-of-Stake (PoS) based on a pBFT-derived consensus mechanism and 200 nodes operating around the world with the help of some strong coordinated optimization. Its transactions are also processed in parallel by GPU hardware natively, which is a first for the Blockchain industry. In other words, Solana is the only blockchain that is multithreaded, which gives it a much bigger room to support better performance.
It’s common knowledge among developers how consensus is achieved in the traditional consensus method. In the traditional layer-1 chains, all nodes must communicate with one another to ascertain that time has passed. The process involves each node either accepting or rejecting a block to show whether it’s valid or invalid. In other words, the old layer-1 chains require validators to talk to one another to come to an agreement that time has passed. As such, if a local clock produces a timestamp that is highly varied from the time used by other validators, it may cause delays in confirmation time or entirely reject the block.
Generally, a high amount of processing power and time is required to sustain nodes that must communicate back and forth to establish the proof each passing time. The high power is needed to determine the correct chronology of communication and transactions, and the longer this takes the more the delay in reaching consensus. The overall impact is the delayed addition of more blocks because the next block can only be verified if the earlier block has been confirmed. Because these older layer-1 chains lack a trusted source of time, there are likely to be some discrepancies between individual device clocks. These discrepancy can reoccur, hence slowing the addition of new blocks. Moreover, they offer no guarantee that each node or network participant will verify the authenticity of each message with the required speed and accuracy.
The design of the Solana protocol is targeted at solving this problem. Solana’s core innovation is Proof-of-History, which is a globally-available, permissionless source of time in the network that works before consensus. In other words, PoH is neither a consensus protocol nor an anti-Sybil mechanism. Rather, PoH is a solution to the clock problem that enables the verification process faster while still preserving many decentralized characteristics without resorting to some central approval point. It achieves this through a consensus method known as Proof-of-History (PoH) to speed up transactions on the Solano blockchain ledger. The design of PoH is in such a way that it will help in the verification of timestamp, cryptographically, in two scenarios. First, it chains messages from nodes to ascertain the validity of blocks together to provide a relative order of events, chronologically, which neither depends on timestamps nor local clock.
The process is accomplished through a network node, which is selected to represent others as the leader. It is placed in charge of generating a proof-of-history sequence, and arranges the messages, sequentially, for maximum efficiency and throughput. Solana network is grounded on what is referred to as Byzantine Fault Tolerance (BFT)’s Tower Consensus, which leverages PoH as a global time source before any consensus is reached, and consequently reducing latency. While any node can be chosen as the proof-of-history leader, failure of the chosen one means that the next highest voting power will be chosen to replace the failed leader. The process is seamless, hence increases the speed of transactions.
SOL Coin on the Solana Blockchain
Solana Blockchain has its native coin known as SOL. The initial minting produced 500 million SOL tokens. The founders retained 12.5% of this amount, 38% were designated as community tokens, 35.4% allocated to locked investors, 12.5% were allocated to Solana Foundation, and 1.6% sold at auction.
It must be noted that Solana Foundation is run by an independent board headquartered in Geneva, Switzerland. The funds from the foundation are what run their marketing, grants, development, and support of the Solana network.
To maintain a healthy supply and price, Solana transaction fees are paid in SOL and burnt or destroyed permanently.
The first role of SOL is to help in the determination of the leader of validators. The process starts when validators processing transactions and run the network are chosen according to how much stake they have in the overall success of the Solana network. This is determined by how much SOL the validators have staked, which means that nodes with the biggest stakes are more likely to be chosen to validate and add transactions to the blockchain. The process will give the chosen validator an associated reward based on this selection. The structure is designed to ensure that those in charge of running the network are incentivized by being assured or guaranteed optimal performance of the network with no failure.
Smallholders of SOL also have the opportunity to delegate their SOL to a larger validator, hence allowing them to earn a portion of the validator rewards after the process is complete. In other words, one does not need to be a larger owner of SOL to earn validator rewards but can lend their SOLs to a larger validator. This is an interesting incentive for individuals who may think their small amount of SOLs will earn them no reward on the Solana network.
Solana network’s incentives are a real source of security to its network because it means that all those on the network are invested in the platform financially, hence increases its functionality and liquidity. It’s also a deterrent to the potential malicious and frivolous actors who may think of attacking the Solana network because there is a requirement that one must stake to become an active participant on the network.
Lastly, the SOL token is structured in such a way that it provides the opportunity for users to generate staking rewards, in addition to using it to pay for transactions on the Solana network and proof-of-stake voting for the network governance.
Wrapping it up…
Solana can be described as the world’s first (and only) web-scale blockchain that offers layer-2 performance based on layer-1 security protocol and simplicity. While the older layer-1 blockchain networks such as Bitcoin and Ethereum all offer single-threaded computers with no guarantee of transaction conflict is executed in parallel, Solana manages to unlock concurrent transactions with no element of conflict or confusion, hence speeding up transactions while maintaining security. Through proof-of-History, Solana ensures high speed, low latency, and inexpensive transactions. Note that all these take place on layer-1 without sharding or adding layer-2 as it has been tried on other networks.
