Solana is not yet widely known outside of the crypto community. But insiders think the blockchain platform is interesting for a wide variety of reasons, starting with its kind founder, Anatoly Yakovenko, who spent more than a dozen years as an engineer working on blockchain protocols. wire at Qualcomm and who says he had a light bulb moment at a Café in San Francisco several years ago after two coffees and a beer.
His big idea was to create a historical record to speed up “consensus,” i.e. how decisions are made on blockchains, which are themselves peer-to-peer systems.
Currently, consensus is achieved on various blockchains when members solve a mathematical puzzle, a mechanism known as proof-of-work. These miners are rewarded for their efforts with cryptocurrency, but the process takes an hour in the case of Bitcoin and a minute in the case of Ethereum, and it is incredibly energy-intensive, which is why neither Bitcoin nor Ethereum have proven to be highly scalable. (Bitcoin’s heavy reliance on fossil fuels is the reason Elon Musk cited earlier this week for why Tesla no longer accepts Bitcoin as payment for the company’s electric cars.)
But there is another way. Indeed, crypto watchers and developers are excited about Ethereum and other currencies who are moving to a new system called “proof of stake”, where people who agree to lock up a certain amount of their cryptocurrency are asked to activate so-called validation software that allows them to store data, process transactions and add new blocks to the blockchain. Like miners, “validators” take on the role of earning more cryptocurrency, but they require much less sophisticated equipment, which opens up the possibility for more people. Meanwhile, because more validators can participate in a network, consensus can be reached faster.
Yakovenko is excited about the change. We spoke with him yesterday, and he certainly isn’t rooting against Ethereum, saying it would be “devastating to the entire industry” if Ethereum isn’t able to successfully transition to proof-of-stake. given its share of mind and market capitalization of around $500 billion. .
Yet he argues that even proof of the stake is not enough. The reason, he says, is that even with proof-of-stake, miners – and bots – have early access to transaction information that allows them to exploit users or upstream transactions because they can control the transaction order.
Enter Yakovenko’s big idea, which he calls “proof of history,” in which the Solana blockchain has developed a kind of synchronized clock that essentially assigns a timestamp to every transaction and disables the ability for miners and robots decide the order of which transactions are recorded on the blockchain. Yakovenko says this allows for greater security and “censorship resistance.”
According to a new explanatory from Solana in the Decrypt POS, Solana also innovated in other ways, including passing transactions to validators even before the previous batch of transactions was finalized, which would have helped “maximize confirmation speed and increase the number of transactions that can be processed both concurrently and in parallel.
“Basically, the speed of light is how fast we can run this network,” Yakovenko says.
Certainly, Solana – who has sold tokens to investors but never a stake in the company – has gotten plenty excited about her prospects. In recent interviews with investor Garry Tan of Initialized Capital and CEO Joe Lallouz of blockchain infrastructure firm Bison Trails, both mentioned Solana among the projects they find the most exciting right now. (We’re assuming both hold his tokens.)
Others are saying in the background that while they understand developer benefits and the need for more scalable blockchains than Ethereum, Solana still needs more developer mindshare to prove its long-term value. and it’s not there yet. According to Solana itself, there are currently 608 validators that help secure the Solana network and 47 decentralized applications (or “dapps”) powered by Solana. In the meantime, there would have been 33,700 active validators help secure “Eth 2.0” from the end of December and 3,000 dapps running on the Ethereum blockchain from February.
In fairness, the Ethereum network went live in 2015, so it has a three-year lead over Solana. In the meantime, Solana has her own lead, says Yakovenko, who is based in San Francisco and has assembled a distributed team of 50 employees, including many former Qualcomm colleagues. Asked about other projects that have taken a proof-of-history approach, he says that while everything is “open source” and “anyone can do it”, there is “not one set of our biggest competitors who say they are going to rework their system and use it.
One likely reason is that it’s almost comically complicated. “It just takes a lot of work to build these systems,” says Yakovenko. “It takes two to three years to build a new layer one, and you can’t really take an idea for one and put it in the other. If you try to do this, you are going to set yourself back at least six to nine months and potentially introduce bugs and vulnerabilities.
Anyway, Solana, who herself has a $12 billion market capitalization, is not interested in competing with Ethereum and other cryptocurrencies on all fronts, suggests Yakovenko. All he really wants is to completely disrupt Wall Street and the rest of the world’s markets.
He knows that sounds crazy. But he says what Solana is building is “an open, fair, censorship-resistant global marketplace” that’s better than anything on the New York Stock Exchange or any other means of settling trades. It is certainly a much greater opportunity than he imagined in this cafe.
“Anything we do to make this thing faster and faster translates into better censorship resistance and therefore better markets,” he said yesterday. “And price discovery is what I imagine to be the deadliest use case for decentralized public networks. Can we be the global price discovery engine? That’s an interesting question to ask.
Yakovenko is far from the only one pondering the growing possibilities. Pointing to the wild swings in cryptocurrency prices right now, he says he suspects that “some of this is just for developers and people who are learning about the network and building cool apps on it.”
It’s exciting when people can “serve themselves and create things they want to bring to market,” he adds. “It’s the secret weapon of decentralized networks over any incumbent like Bank of America or Visa or whatever. These large companies can’t iterate and scale as fast as a global collection of engineers who can just get together and code whenever they want.
He saw very similar dynamics play out at Qualcomm, actually.
“Working at a big company, it seems like there’s a ton of resources and they can accomplish anything. But you saw us working on proprietary operating systems while the Linux guys worked for fun first, right? And it seemed like it was just a weird hobby that people had; they coded operating systems at night; they were coding over the weekend.
Back then, to many outsiders, Linux-focused engineers looked a lot like geeks with too much free time. “Then all of a sudden,” Yakovenko says, “Linux is Android’s de facto mobile iOS.”