Solana is a public blockchain that aims to challenge Ethereum’s current position as the leading platform for dApp development. The protocol uses a novel Proof of History algorithm, as well as Proof-of-Stake to achieve superior throughput and much lower transaction fees than Ethereum The innovative approach employed by the protocol allows the Solana team to benefit from decades of research into distributed systems.
What is Solana?
Even though Solana is a relative newcomer to the blockchain space, the protocol has already established itself as one of the most prominent blockchain projects out there. The rising popularity of NFT marketplaces running on Solana has been among the recent success stories in the blockchain space, while the protocol’s native token SOL has been among the best-performing cryptocurrencies this year and is currently the fifth most valuable token on the market.
Much of that success has been driven by the demand for a cheaper alternative to Ethereum, whose limited scalability often leads to significant hikes in transaction fees. Solana, in contrast, is able to achieve a very high number of transactions per second which helps to keep transaction fees low. Solana achieves this through a clever architecture and a consensus model that uses a combination of Proof of Stake and a novel Proof of History consensus algorithm.
Proof of History is the key innovation that separates Solana from other blockchain protocols. Let’s examine it in more detail.
What is Solana’s Proof of History?
The creator of Solana, Anatoly Yakovenko, found the inspiration for the Proof of History algorithm in the work of Leslie Lamport, who had studied distributed systems decades before the arrival of blockchain technology. Lamport’s key contribution to the field was proposing a method that theoretically enables a decentralized system to rival a centralized one in terms of speed. Instead of relying on timeouts, the method proposes the use of a clock-driven algorithm and clock synchronization to synchronize the execution of processes within a distributed system.
Yakovenko and the Solana team found a way to utilize that method in a blockchain-based system by using a similar mechanism to the nLocktime feature that can be found in the original blockchain protocol – Bitcoin. NLocktime allows for postdate transactions using block height instead of timestamps. As it turns out, this is a cryptographically-secure way to show that time has passed.
The same principle is used to power Solana’s key innovation – the novel Proof of History algorithm. However, the Solana team has refined the approach by using a much more granular verifiable delay function, a SHA 256 hash chain, which is used to checkpoint the Solana ledger and coordinate consensus. Essentially, this method assigns a cryptographic clock to every transaction.
According to Solana, thanks to this method, the protocol could theoretically reach 710,000 transactions per second, or the theoretical limit of a 1GB centralized network.
What is Solana’s Proof of Stake?
In addition to Proof of History, Solana utilizes a Proof of Stake algorithm which lets users stake tokens to help secure the Solana network. The protocol uses a delegated stake model, which sees users delegating their tokens to established network validators. This is a shared-risk, shared-reward model that incentivizes token holders to have their tokens delegated for long periods of time.
At the same time, the goal of a validator is to get more people to delegate tokens because the delegated stake size determines how often a validator is chosen to write new transactions to the ledger. In addition, similarly to other PoS protocols, Solana employs a slashing mechanism – which removes and destroys tokens from a stake – to penalize malicious behavior, which creates a financial incentive for validators to perform their duties diligently.
Validators also charge delegators with a commission fee, which is calculated as a percentage of rewards earned. This fee is meant to cover the costs validators incur when running and maintaining their systems. And since validators always look to attract more deligators, this encourages them to compete on fees – naturally, validators who offer lower fees for their services are more attractive.
Solana – technical overview
At the heart of the protocol’s architecture lies the Solana cluster – a set of validators working together to serve client transactions and maintain a ledger. At any given moment, a cluster has a leader, with the role being in rotation among all validators participating in that cluster. The cluster leader is responsible for bundling and timestamping incoming client transactions (which are first received by validators and then relayed to the leader) by utilizing the PoH algorithm. Then the leader pushes them onto the cluster’s ‘data plane’. From there they are validated by the validators and added to the ledger.
This system is designed to allow for Solana to avoid the lengthy block times that are a necessity in PoW and, to a lesser extent, other PoS systems. This is, essentially, what makes Solana’s high throughput possible.
For a more detailed overview of Solana’s architecture, we recommend visiting https://docs.solana.com/cluster/overview
What is Solana’s Programmability?
Solana is a programmable blockchain that can support decentralized applications, which makes it a direct competitor to the leading dApp platform on the market – Ethereum. However, unlike Ethereum and other protocols that utilize smart contracts, Solana utilizes a different approach to achieve programmability.
For starters, smart contracts in Solana are called programs and are stateless. This means that, unlike Ethereum smart contracts which contain both the program logic and state, Solana programs contain only the logic and are deployed on-chain in a ‘read-only’ mode. Once deployed, the programs can be accessed by external accounts, which contain the data related to program interaction (unlike Ethereum accounts, accounts on Solana can store data). This separation of logic and state informs the specific production flow of Solana dApps.
Every Solana dApp consists of two parts: a blockchain-based program (or set of programs) and a web application through which users can interact with the blockchain code. The blockchain program is deployed directly to a Solana cluster and users can then send instructions to the program via transactions. A single transaction can contain one or several instructions, which are then executed sequentially and atomically. If all instructions are valid, the program is successfully executed. However, if even a single instruction is invalid, the changes made by the transaction are discarded.
What are Solana’s Ups and downs?
Solana’s impressive performance in terms of transaction throughput and cost effectiveness has allowed the protocol to emerge as one of the most prominent players in the DLT space. The recent boom of Solana-based NFTs and the rise of NFT marketplaces like Solanart has shown that the platform is capable of competing in an area where Ethereum is widely viewed as an undisputed leader. Meanwhile, the spectacular rise of the SOL token this year suggests that there are many who believe that Solana has a bright future.
However, it hasn’t all been smooth sailing for Solana. Earlier this year, Solana suffered a sudden network outage caused by a surge in transaction volume. And last Thursday the platform suffered a DDoS attack that slowed down the network. The incident prompted some observers to suggest that Solana’s PoH algorithm might have design flaws that make the blockchain more vulnerable.
Most recently, a launch of NFTs on Monday caused a heavy network congestion, which contributed to a significant SOL price plunge.
Despite its recent problems, Solana has certainly shown a lot of potential and generated excitement within the blockchain space. Being a relatively new platform that utilizes novel techniques like PoH, it is normal for Solana to experience a few hiccups along the way. That said, as with any nascent project with aspirations for success, it is important for such issues to be resolved in the timely manner and the project to continue to develop and grow. So far, it seems that the developers behind Solana are committed to doing just that. Case in point, following Thursday’s DDoS attack, Solana experienced a big surge in development activity.
So, while it still remains to be seen whether Solana will realize its full potential, if the developers behind it remain committed to improving the platform, it may very well become one of the strongest competitors in the blockchain space.