Blockchain has a lot of potential. The first decade of decentralized token platforms has been successful by any measure. Solana is working to create solutions that will allow decentralized blockchains to become a global system that can replace existing major data systems.

Solana has some innovative solutions to some of the most common challenges that blockchain faces. One of the biggest ones isn’t new. Scalability has been a hot topic in the blockchain community, and one of the biggest reasons why many people doubt that a decentralized blockchain could replace centralized payment systems like Visa.

Bitcoin was one of the biggest breakthroughs in bridging trust and the creation of new money, but it probably isn’t going to be the platform that creates a decentralized global settlement system. Like many of the blockchains that exist, it simply can’t settle transactions fast enough to be practical as a global platform.

Solana has a good solution to the scalability dilemma, and it also has some other great ideas that could help blockchain enter its next phase of development.

Meet Solana

Solana was founded in 2017 by Anatoly Yakovenko, a former executive at Qualcomm with vast experience working with decentralized and distributed systems, alongside working on compression algorithms for Dropbox.

Anatoly joined forces with CTO Greg Fitzgerald and Chief Scientist Eric Williams to create a trustless and distributed protocol that encodes the passage of time within the data structure and allows higher scalability than common layer 1 blockchains.

As of July 2019, Solana has secured $20M USD in funding, with the support of their lead investor Multicoin Capital.

Solana Sees Solutions

Solana has created eight key innovations that may change how blockchain is implemented as a decentralized system. It has implemented Proof of History (PoH), a protocol to embed passage of time into the blockchain data structure, and integrated it with TowerBFT the system’s Proof-of-Staked based consensus mechanism.

By using PoH, which is a high frequency Verifiable Delay Function (VDF), Solana hopes to eliminate the issues which have given rise to other potential solutions, such as sharding.

A Verifiable Delay Function is a function that requires more computational time to evaluate than to verify. Solana uses a serialized, recursive SHA256, periodically sampling the count and hash, as an effective VDF. This data structure takes real time to generate given the specific SHA256 instructions included on CPUs and can be verified in parallel by splitting the hash chain across multiple GPU cores. According to the company:

“Solana’s specific implementation uses a sequential preimage resistant hash that runs over itself continuously with the previous output used as the next input. Periodically the count and the current output are recorded.

For a SHA256 hash function (also Bitcoin’s hash algorithm), this process is impossible to parallelize without a brute force attack using 2¹²⁸ cores.

We can then be certain that real time has passed between each counter as it was generated, and that the recorded order of each counter is the same as it was in real time.”

Integration With TowerBFT

The use of the PoH ledger allows a user to compute the state of all the nodes with a fraction of the messaging overhead of most PoS systems. It also works with Solana’s version of PBFT (Practical Byzantine Fault Tolerance) as the network’s clock, allowing the protocol to encode vote lock-outs in the ledger.These lock-outs are used to ensure that Validators (block producing nodes) aren’t able to vote on two separate forks of the blockchain at the same time. If an attempt is detected, the malicious Validator will be penalized and have his stake slashed.

Practically, each time a validator votes for a specific version of the ledger at a specified PoH height, there is a lockout that is associated with that vote. That validator is restricted from voting on a future version of the ledger that doesn’t contain that vote for a specified amount of PoH time (w/out the risk of slashing). Each additional vote on a ledger increases (doubles) the vote lockouts of each previous vote, creating an exponentially growing commitment to safety (consistency) on the given branch.

The Proof of Stake

TowerBFT thereby provides the slashing rules that underlie Solana’s Proof of Stake consensus architecture. In this design, validators’ ledger votes are weighted by the amount of capital (SOL) they have locked at stake while validating.

Valiators can also receive tokens from non-validating token holders and stake those tokens on their behalf. Rewards are distributed to validators in proportion to their stake, so non-validating token holders can earn rewards by delegating to a validator and receiving the associated rewards, minus a commission fee taken by the validator.

Solana’s block production is determined by a randomly generated leader schedule, which is set according to his proportion of the total stake at the start of an epoch. That is to say, a validator is expected to be elected leader with a frequency that is commiserate with their proportion of total stake (e.g. a validator with 20% of total stake will represent roughly 20% of the leader schedule)

Rewards for block production will be paid by both inflation, that is expected to reduce over time, and by transaction fees.

Ideas that Matter

The novel use of PoH, TowerBFT and PoS aren’t the only innovations that Solana is bringing to the table. The company has also created other viable systems that address some of the shortcomings in the first generation of decentralized blockchains.

Archivers

At full capacity, Solana estimates that its blockchain would generate roughly 4 petabytes of data on an annual basis. If it were a requirement that a full node store this data, it would introduce a huge barrier to entry for participation in the protocol.

To address this, Solana is able to leverage PoH to stripe and store the growing ledger across storage light-clients (Archivers). This means that the ledger can be split up and distributed across many network participants with no single participant needing to store the entirety of the ledger while the network can ensure multiple redundancy of the global ledger. Additionally, this provides a low barrier to entry to become involved with Solana as a network participant. All is needed is some extra storage space and an internet connection and it is possible to begin earning Solana tokens are rewards for participating as an Archiver on the network.

Solana plans to incentivize full nodes with an estimated 3% of SOL inflation (yearly), which is a clear benefit over Bitcoin. Although Bitcoin is the most valuable blockchain in the world when measured by market cap, full nodes aren’t incentivized.

Turbine

The amount of time it requires to propagate all blockchain data to all nodes can be a major hindrance to scalability, because of the lack of bandwidth.

Solana thinks that the answer is to break the data down into packets, which is how BitTorrent distributes huge files with relatively small amounts of bandwidth. Turbine leverages the entire network to move data and allows nodes to do more with less.

Sealevel

Solana thinks that parallel validation can be applied to smart contracts, and that the entire network can benefit from gains in efficiency.

According to Solana:

“Solana’s runtime can process tens of thousands of contracts in parallel, using as many cores as are available to the Validator. This is because Solana transactions describe all the states a transaction will read or write while executing. This not only allows for non-overlapping transactions to execute concurrently, but also for transactions that are only reading the same state to execute concurrently as well.”

It is clear that Solana has created an integrated blockchain platform that offers up well thought out solutions to some of the biggest issues that decentralized blockchains face as they grow in popularity.

The SOL Token

Solana also has a token, called SOL, which can be passed to nodes on the Solana blockchain for running an on-chain program or validating its output. Solana says that:

“…a SOL may be split as many as 34 times. The fractional SOL is called a lamport. It is named in honor of Solana’s biggest technical influence, Leslie Lamport. A lamport has a value of approximately 0.0000000000582 sol (2^-34).”

Solana Could Make a Big Impact

Solana is working to create scalability solutions for decentralized blockchain systems, and it has addressed some of the biggest issues that decentralized platforms face. By removing sharding from its design, Solana makes network-wide validation faster, and potentially more secure in the long-run.

The Solana blockchain has the potential to match a platform like Visa, without any sort of centralized system. The non-linear architecture that Solana employs may force other blockchain developers to rethink linear blockchain systems, due to their inherent limitations.

Proof of History (PoH) protocol is an interesting way to remove the problem of time from a blockchain, and the system that Solana may be successful in creating a global relative time standard for decentralized blockchain operations.