Solana 101: the lightning fast L1 ⚡
Solana is a Layer 1 protocol that can be used to create apps, smart contracts, and DeFi solutions. Solana uses proof of stake and proof of history protocols to operate at dramatically higher speeds and offer lower costs than other blockchains. Solana can handle 65,000 TPS. For reference, Bitcoin can handle about 7 TPS and Ethereum can handle 30 TPS. Here’s a graphic by @rareliquid that compares Solana’s speed to existing L1 platforms (and ETH 2.0, which is yet to be launched).
What’s even more incredible is that Solana is able to achieve these speeds and keep costs low without sharding (splitting a blockchain network into smaller partitions, known as shards). This is important, as sharding hinders a network’s composability (the ability of different applications to talk to each other). This essentially means that sharding could break DeFi. Solana continues to own an increasing amount of the growing DeFi pie. The finance sector is one fourth of the world economy. Solana is the first blockchain capable of handling the volume required by traditional financial markets. Crypto is going to eat into a large portion of the financial sector and Solana is going to benefit greatly as the go-to platform for building DeFi apps.
Solana is one of the first blockchains to solve the scalability trilemma. Ethereum co-founder Vitalik Buterin wrote, “The scalability trilemma says that there are three properties that a blockchain try to have (scalability, security, and decentralization).”
Solana has 8 main innovations that allow it to solve the scalability trilemma:
- Proof of History (POH) — a clock before consensus;
- Tower BFT — a PoH-optimized version of PBFT;
- Turbine — a block propagation protocol;
- Gulf Stream — Mempool-less transaction forwarding protocol;
- Sealevel — Parallel smart contracts run-time;
- Pipelining — a Transaction Processing Unit for validation optimization
- Cloudbreak — Horizontally-Scaled Accounts Database; and
- Archivers — Distributed ledger storage
These eight innovations combine to make Solana scalable, secure, and reasonably decentralized.
The main knock against Solana is that it’s not as decentralized as Bitcoin and Ethereum. But this simply is not true. The generally-accepted way to measure decentralization “Nakamoto Coefficient.” According to @balajis The Nakamoto coefficient is “the minimum number of entities in a given subsystem required to get to 51% of total Capacity.” Solana’s Nakamoto coefficient of 19 is much higher that Ethereum’s 3–4 and Bitcoin’s 4.
The Solana Ecosystem is great. Developers love to build on Solana. Solana is also great at helping new companies grow. They offer great services including:
- Smart Contract Audits. Solana Labs trains and assists third-party auditors to audit projects and make sure that they’re safe.
- Solana Program Library. Solana maintains something like an open source library that companies can run with by building front-ends and businesses around them.
- Solana Capital. Solana invests in projects built on the protocol.
There are already some great Solana Protocols that exist:
- @RaydiumProtocol is an automated market maker.
- @Oxygen_protocol $OXY is a DeFi Prime Brokerage Protocol with various strategies for earning yield.
- @bonfida $FIDA provides on-chain data, trading strategies and their own alternative DEX.
To summarize Solana’s main advantages are:
- Scalability (65K TPS/ subsecond global state finality)
- Low cost (Avg txs fee is $0.0007)
- Composability (High performance without layer 2s/sharding)
- Top tier ecosystem partners
- Decentralized and secure
- Scalable composability is not possible with sharding/layer 2s
Solana is way ahead of the competition. More developers and users have been moving to Solana, and it’s in a position to explode and grow.