Breaking the Crypto Adoption Barrier? Solana aims to do her own thing

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At SALT 2021, there was a lot of talk about Solana Labs, the supersonic runner of layer one blockchain networks. Unsurprisingly, much of this conversation centered around speed or, in networking parlance, Transactions Per Second (TPS).

If blockchain technology is ever to achieve mass adoption of a billion users, let’s say it has to accelerate, said Sam Bankman-Fried, CEO of crypto exchange platform FTX, in of a panel session Monday morning, adding: You can’t have 1 billion people using a channel that has 10 transactions per second. It just doesn’t work.

To put it in context: The credit card giant’s Visa payment system processes around 24,000 TPS, while Ethereum, the first smartchain-enabled blockchain network on which most DeFi and NFT apps still run, does around 30 TPS, although that number may increase significantly when Ethereum 2.0 launches in 2022.

Meanwhile, the Solana network was timed at 50,000 TPS last year, as founder and CEO Anatoly Yakovenko told Cointelegraph in an interview with SALT, although it was recently timed at 200,000 TPS by a third-party validator. As the hardware improves, the capacity increases, he said.

Solana, with a staff of 60 all volunteers, has experienced explosive growth since its launch in March 2020. Today, it hosts more than 400 projects, including many non-fungible token (NFT) and decentralized funding ( Challenge). USD Coin (USDC), the # 2 stable coin by volume, is natively integrated on Solana and also hosts the decentralized Oracle Chainlink network, as well as the decentralized Serum derivative exchange, which FTX co-created. Solanas market capitalization topped $ 62 billion on September 9.

Longtime Solana promoter Bankman-Fried believes it’s one of the few places in DeFi right now where you can see it reaching 1 billion users. It’s not there right now. He’s probably got another factor of 50 to go or something. But that’s much better than a factor of 50,000.

You don’t have to pay them

Weren’t super fat, 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 work pro bono. Many have entrepreneurial ambitions.

They may have quit their jobs at Google, or whatever, Yakovenko said. They are going to start a business. It will 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 provides the financial infrastructure. Plus, you don’t have to pay them, Yakovenko continued. They do it on their own. And himself? Is he also an unpaid volunteer?

From the start, the foundation provided a grant and tokens to develop the software, to keep improving it.[…] We financed ourselves mainly thanks to 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: trading method used by purses which matches offers with offers. Because it was designed for market makers who have to submit millions of trades per day, the Solana network has to be really, really fast and really, really cheap.

At the latter point, the average cost of a network transaction is $ 0.000025, according to Solana’s website. On Thursday, September 16, it was reporting about 2,000 live transactions per second. It claims to be the fastest blockchain in the world.

Of course, it is not only 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 cannot be closed and it cannot be censored, has Yakovenko said.

Jeremy Allaire, CEO of Circle, the main operator of USDC stablecoin who participated in the SALT panel with Bankman-Fried, Yakovenko and others, said USDC can complete transactions on the Solana network in milliseconds. In the future, payments will be a commodity-free service on the Internet, costing nothing, Allaire predicted, like emailing today.

The network has also taken unexpected turns. One of the surprising things we’ve seen is NFTs for art, Yakovenko said. The network, like Ethereum, is smart contract compatible, and at first you would think you’re going to put things like real estate on the network because smart contracts are really good at enforcing agreements globally. . What they discovered, however, is that real estate is really hard to do because there are so many legal overhead costs attached to it.

On the other hand, attaching smart contracts to NFTs can allow artists to earn income from their secondary art sales. So when I first sell my artwork to you, and you sell it in Austin [i.e., someone else], I get a certain percentage of that side sale. This is impossible to do in the world of physical art where you have massive amounts of legal infrastructure, for example copyright on a global scale, but here a few thousand lines of code do it, he told Cointelegraph.

Safety or speed but not both

Yet while it is as useful as a general purpose operating system, Solana may not be everything for everyone. A network must specialize to some extent. There are Pareto efficiency tradeoffs, Yakovenko said. If I optimize for hash power security, it means I can’t have a lot of TPS. You have to choose one or the other, i.e. safety or speed. Different parties choose what they are best at. Were choosing one thing. Bitcoin chooses its thing. Ethereum their thing.

When asked to explain Solana’s spectacular speed advantage over the two largest crypto networks Bitcoin and Ethereum, he said their proof-of-work networks focus on maximizing electricity to secure network, while with new generation PoS networks like Solana, security comes from cryptography. .

Still, the differences in speed and cost are stark, and some have even called Solana an Ethereum killer. Should the world’s largest programmable, i.e. contract-activated, blockchain network be affected?

The Ethereum community doesn’t need to worry, but rather to be excited about new capital and users entering the space, like Lex Sokolin, chief economist at Ethereum-based software company ConsenSys, has told Cointelegraph, further noting that Ethereum continues to lead DeFi, NFT, developer and user community, and is expanding across L2s and protocols like Polygon, Arbitrum, Optimism, Fantom, BSC and others. Regarding Pareto’s efficiency tradeoffs, Sokolin added:

Other channels may indeed rely on other types of functionalities and risk / return trade-offs. We believe that for a global financial system to meaningfully utilize a blockchain, security and trust are paramount and that the years of successful operation of Ethereum support this claim.

In this sense, Ethereum may have obtained justifications this week following the reports of a denial of service interruption of Solanas, which arguably touches on the problem of security versus speed, as Solana and Arbitrum were unable to stay online, while Ethereum is unaffected. .

Edward Moya, senior market analyst for the Americas on the multi-asset trading platform Oanda, told Cointelegraph that Solana is a blockchain that could become the preferred among decentralized applications as it could be scaled to face the credit card giants. Additionally, Solanas’ latest $ 314 million fundraising round likely secured her leadership position by winning the DeFi race.

Will Google be disturbed?

Meanwhile, when it comes to disruptions, Yakovenko doesn’t stop at banks, he targets tech giants: I’m from Silicon Valley, so I’m targeting Googles, Facebooks, Amazons. Blockchain technology is going to be quite disruptive for these people. But these guys are smart. They are likely to change their technologies to work on crypto networks. Banks are not necessarily finished either, according to him:

I don’t think the banks are going to disappear at all. They will achieve these [DeFi] the tools reduce risk, improve compliance, make things smoother, cheaper and faster and they will use them. Because at the end of the day, it’s just a bunch of code and technology.

Overall, blockchain adoption is still in its infancy, from Yakovenkos’ perspective. There are maybe 10 million real crypto users. Not just the holders, but the people who have custody of their keys. When were there only 10 million people surfing the Internet in 1996, maybe? This is where the blockchain is now.

Related: Across the Seven Seas: Retail, Bitcoin-loving Institutional Investors

If blockchain is a race, Moya told Cointelegraph, then Ethereum is two years ahead and has already entered into several key partnerships, but in the end, if Solana can beat it, Ethereum should be nervous. Solana, however, will have growing pains, as the recent example of resource depletion has clearly shown.

Bankman-Fried, for his part, presented the upstart blockchain network in almost Arthurian terms, telling the SALT convention:

One of the founding principles of Solana is that it improves over time, that it improves with Moores’ law, that it has the ambition to serve billions of users with millions of transactions. per second which is really the holy grail of what DeFi can become.

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