Solana is a novel, high-speed, Proof-of-Stake (PoS) blockchain protocol. Founded in 2017 by Anatoly Yakovenko and supported by Sam Bankman-Fried, Solana was built to deliver next-level scalability solutions without compromising on decentralization or network security. It also operates at a much lower cost than larger networks like Bitcoin or Ethereum, with average transaction fees of 0.000005 SOL (or a small fraction of a cent).
Solana importantly introduced the Proof-of-History consensus algorithm, which allows the protocol to avoid having to agree on timestamps. Anatoly explains what Proof-of-History is in greater detail here. We’ll get into this later. Suffice it to say, this produces an incredibly fast and streamlined blockchain that can process over 50,000 TPS!
Solana also has its own native token, SOL, which can currently be used for staking and eventually for governance. First introduced in March 2020 on the beta mainnet, it is now the 17th largest crypto by market cap.
The Solana team divides its innovative new developments into 8 core innovations:
- PoH: A clock before consensus
- Tower BFT: A PoH-optimized version of PBFT (Practical Byzantine Fault Tolerance)
- Turbine: A block propagation protocol
- Gulf Stream: Mempool-less transaction forwarding protocol
- Sealevel: The world’s first parallel smart contracts run-time
- Pipeline: Transaction processing unit for validation
- Cloudbreak: Horizontally-scaled accounts database
- Archivers: Distributed ledger storage
Let’s dive in!
How It Works - A New Architecture
Solana is a Proof-of-Stake blockchain, meaning it relies on users to stake their SOL tokens in order to become validators. Validators go through and verify transactions, which earns them fees. In a validator cluster, one leader is responsible for generating ledger entries - the chance of landing this role increases the more SOL tokens a validator stakes.
No one validator node is the leader for long; a leader schedule limits each chosen validator to four blocks (around 1.6 seconds), before the next leader takes over. Solana is also quite accessible, with no minimum amount of SOL required to become a node!
The Solana blockchain is built upon 8 core innovations, which combine to make the network highly scalable, secure, and decentralized.
ANATOLY YAKOVENKO, FOUNDER OF SOLANA
Solana’s breakthrough new Proof-of-History protocol is arguably what attracted the most fanfare. This is because distributed networks face considerable difficulties when having to agree on the time of transactions. Typically, transactions are stamped depending on their local time; confirmations or rejections are then stamped again in turn. As a result, a large portion of time and energy is spent verifying the accuracy of timestamps.
PoH ingeniously solves this by synchronizing time across the network. This is done by adding the value of time, cryptographically, within the ledger itself. The PoH system works by using a Verifiable Delay Function (VDF), meaning it designates a sequence of steps that must be completed. All validators run a sequential hash that uses the previous output as the next input - creating a coordinated clock of values across the network that serves as a verifiable record of events.
PBFT, or Practical Byzantine Fault Tolerance, is a system that allows a distributed network to reach consensus even if some of its components fail. In other words, it allows the system to continue running despite malicious actors.
Thanks to Solana’s PoH mechanism, Tower BFT builds from PBFT to reduce the amount of processing power required to secure the network. The ‘clock before consensus’ therefore allows Solana to achieve extremely high throughput.
Turbine addresses the issue of circulating large amounts of data in a peer-to-peer network. Modelled after BitTorrent, it aims at breaking down the information to be sent by distributing packets of it to different validators. The validators then send their data to a subgroup known as a neighborhood. Each neighborhood shares part of its data with the neighborhoods below it.
A mempool is where a node stores unconfirmed transactions - a sort of waiting area. The fuller the mempool is, the slower the network becomes. The Solana mempool can handle up to 50,000 TPS, nearly 10,000 times more than the Bitcoin network. Gulf Stream facilitates this by forwarding transactions to the intended validators ahead of time, allowing them to confirm transactions prior to the next block’s completion. This is made possible by having a predetermined order of leaders and validators.
SOLANA ARCHITECTURE FROM SOLANA.NEWS
Sealevel is Solana’s transaction processing engine, designed to sustain parallel transactions and horizontal scaling. This supports the simultaneous operation of numerous smart contracts. While Sealevel is a Virtual Machine, it does not execute transactions within the VM, but outsources to hardware.
This is the transaction processing unit (TPU) of Solana, set up to maximize the efficiency and workflow of all components. It works similarly to how a CPU works.
Cloudbreak is Solana’s horizontal scaling solution at the storage level - the point being to design software that reduces the workload of the hardware. Cloudbreak leverages various mechanisms to achieve this, like memory-mapped files, sequential operations, and garbage collection.
The costs of storage on a network can create a barrier to participation, especially on a high-level blockchain. In order to store data efficiently, Solana uses archivers instead of validators. They do not participate in consensus, nor do they need to have much equipment to operate. Archivers will also occasionally be asked to prove they are properly storing data by submitting a Proof of Replication.
As we can see, Solana is an incredibly high-performing protocol, with an increasingly large ecosystem of dApps, AMMs and NFTs (among others). It presents a very compelling solution to the trilemma faced by blockchain protocols - achieving scalability, security, and decentralization without compromising on any one part. While Ethereum remains the most widely used smart contract protocol, the high gas fees and network congestion have pushed users to seek alternatives. These include Binance Smart Chain and Polkadot, in addition to Solana.
It also hosts a community incentivized testnet, Tour de SOL, where users can gain rewards for various achievements. These range from promoting Solana and being an active member of the validator community, to exposing network bugs or weaknesses and earning bug bounties! On that note, with the exception of two months, there have consistently been at least 200 Github commits per month.
Solana also boasts a thriving community characterized by positive investor sentiment. In 2021 alone, SOL price has jumped from $1.8 on Jan 1st to an ATH of $55.91 on May 18th. At the time of writing, it stands at a solid $32.31. You can buy SOL on most major centralized exchanges, including Coinbase Pro.