There was a lot of talk at SALT Conference 2021 about Solana Labs, the supersonic racer of layer-one blockchain networks. Not surprisingly, much of
There was a lot of talk at SALT Conference 2021 about Solana Labs, the supersonic racer of layer-one blockchain networks. Not surprisingly, much of that conversation centered on speed — or, in network parlance, transactions per second (TPS).
If blockchain technology is ever to achieve mass adoption — 1 billion users, say — then it has to get faster, said Sam Bankman-Fried, CEO of crypto exchange platform FTX, in a Monday morning panel session, adding, “You can’t have 1 billion people using a chain that has 10 transactions per second. It just doesn’t work.”
To put things in context: Credit card giant Visa’s payments system processes about 24,000 TPS, while Ethereum, the first smartchain-enabled blockchain network upon which most DeFi and NFT applications still run, does about 30 TPS, though that number could rise dramatically when Ethereum 2.0 launches in 2022.
Meanwhile, the Solana network was clocked at 50,000 TPS last year as founder and CEO Anatoly Yakovenko told Cointelegraph in an interview during SALT, though recently it was timed at 200,000 TPS by a third-party validator. “As the hardware gets better, capacity goes up,” he said.
Solana, with a workforce of 60 souls — all volunteers — has enjoyed explosive growth since its launch in March 2020. Today, it hosts more than 400 projects, including many nonfungible token (NFT) and decentralized finance (DeFi) projects. USD Coin (USDC), the No. 2 stablecoin by volume, is integrated natively on Solana, and it also hosts decentralized oracle network Chainlink, as well as decentralized derivatives exchange Serum, which FTX co-created. Solana’s market cap on Sept. 9 topped $62 billion.
A long-time proponent of Solana, Bankman-Fried believes that “it’s one of the few places in DeFi right now where you can see it scaling to 1 billion users. It’s not there right now. It probably has another factor of 50 to go or something. But that’s a lot better than a factor of 50,000.”
“You don’t have to pay them”
“We’re not super big,” Yakovenko told Cointelegraph when asked about the organization’s modest workforce. Like Bitcoin and many other decentralized organizations, the employees who maintain and expand the network are working pro bono. Many harbor entrepreneurial ambitions.
“They may have quit their job at Google, or whatever,” explained Yakovenko. “They are going to build a company. It’s going to be a Web 3.0 application. Maybe it’s financial, maybe it’s art-based. They will raise capital and build it on Solana. Solana is effectively that layer that is supplying financial infrastructure.” Moreover, “You don’t have to pay them,” Yakovenko continued. “They do it on their own.” What about himself? Is he an unpaid volunteer too?
“From the start, the foundation supplied a grant and some tokens to develop the software, to keep improving it.[…] We’re basically funding ourselves through that.”
Solana was built for speed, Yakovenko said, and what makes it different from other proof-of-stake (PoS) networks is that Solana “is optimized for a specific use case: online central limit order book (CLOB),” he said — i.e., a trading method used by exchanges that matches bids with offers. Because it was designed for market makers who need to submit millions of transactions per day, the Solana network must be “really, really fast and really, really cheap.”
To this last point, the average cost of a network transaction is $0.00025, according to the Solana website. On Thursday, Sept. 16, it was reporting about 2,000 live transactions per second. It claims to be “the fastest blockchain in the world.”
Of course, it’s not just market makers who can use the network. “It’s like Linux” — the popular open-source operating system used by many web servers — “a general-purpose operating system that has this interesting property: It can’t be shut down, and it can’t be censored,” Yakovenko said.
Jeremy Allaire, CEO of Circle — the principal operator of USDC stablecoin — who was a participant on the SALT panel with Bankman-Fried, Yakovenko, and others, said USDC can complete transactions on the Solana network in a matter of milliseconds. In the future, payments are going to be “a commodity-free service on the internet,” costing nothing, Allaire predicted — like sending an email today.
The network has taken some unexpected turns, too. One of “the surprising things we’ve seen are NFTs for art,” said Yakovenko. The network, like Ethereum, is smart-contract enabled, and at the beginning, “you’d think you’re going to put things like real estate on the network” — because smart contracts are really good at enforcing agreement on a global scale. What they found, though, is that real estate “is really hard to do because there’s so much legal overhead” attached to it.
On the other hand, attaching smart contracts to NFTs can enable artists to receive revenues from their…
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