Solana has just broken through the $200 price level as it stakes its claim to be the go-to commercial rail of the blockchain industry, and publicly listed Sol Strategies aims to become the driving force to make that happen.
Before you ask, Sol Strategies (formerly Cypherpunk Holdings) is much more than just a ‘Microstrategy for Solana’ that acts as a proxy ETF – it is also a network validator and VC. That means Sol Strategies’ shareholders don’t just get the income from the ‘mining’ work of verifying transactions; they will also benefit from the acquisitions it plans to make in the Solana ecosystem.
The company’s strategy is predicated on its confidence in the robustness and efficiency of the Solana blockchain.
So we cut to the chase with Sol Strategies CEO Leah Wald and asked her some pertinent and detailed questions about blockchain performance and development plans and how they measure up to the mission to bring powerful value-enhancing decentralized network frameworks to legacy industries.
As you would expect, Sol Strategies has conducted thorough due diligence on the Solana protocol, which makes them among the best-positioned people to talk about the network’s key roadmap waypoints, such as Firedancer and Solana Mobile.
An incomplete map of the Solana ecosystem. Source: Messari
Are Solana network outages now a thing of the past?
We started the interview by looking at Solana’s well-documented history of blockchain outages – pretty much the worst thing that can happen to a blockchain. Trying to run a decentralized peer-to-peer ride-hailing business with no intermediary taking a cut out of the driver’s pay and the cheaper fares the rider enjoys will not work if the network that underpins it has a propensity to fail.
Solana has a history of security vulnerabilities and outages – nine major or partial outages since inception, to be precise. Network congestion is also a pressing issue. Can Solana decisively tackle these problems?
The current performance suggests Solana has a way to go: Regarding network congestion and transaction (tx) failures, the Jupiter aggregator has, on occasion, reported a tx failure rate of as high as 83%.
Meanwhile, network congestion has led to a failure rate of as much as 75% tx failure at one point. Over the last 30 days, for instance, the success rate was around 62%.
In the 30 days to October 17, the actual average transaction per second (tps) clocked in at 758, although according to the official Solana explorer, tps is 3,561 as of the time of writing.
By contrast, Ethereum runs at a relatively sluggish (and expensive) 15-30 tps, although its Surge upgrade aims to achieve a theoretical 100k tps.
Solana explorer
Solana network security and decentralization. Source: Messari
LW: It has now been 266 days since a partial outage (Feb 6th), which demonstrates Solana’s ability to tackle these problems. In terms of TX failures, the reported failure might not necessarily be correlated to regular users’ experience versus those attempting arbitrage or other higher-frequency techniques. Our experience has been positive, with no failures in our regular institutional use cases.
It’s true that Solana has faced challenges with outages and network congestion, and these are well-documented growing pains for a network that is pushing the boundaries of performance.
However, the Solana team has made significant strides in addressing these issues, particularly with recent updates that improve network resilience and reduce the likelihood of future outages.
Scalability is always a concern for Layer 1 blockchains, but Solana’s roadmap is promising. The continued development of solutions such as Firedancer and improvements in transaction processing give us confidence that these issues will be resolved as the network matures.
Solana financial overview
We asked Leah Wald what she thought about the following efficiency-improving solutions:
The new Firedancer validator client will lift tips from a theoretical 50k-600k to 1 million. Firedancer has achieved over 1 million tps on Testnet and is written in C, providing critical client diversity. However, implementing Firedancer presents challenges, such as tx propagation, consensus scalability, and execution throughput to mitigate spam and DDoS attacks.
LW: Firedancer is a game changer. Introducing a client written in C brings critical diversity and significantly enhances transaction throughput, as shown in tests. The challenges in implementing it – such as transaction propagation and consensus scalability – are being addressed, and it’s a solution we believe will further cement Solana’s position as a leader in high-performance blockchain infrastructure.
Stake-weighted quality of service:
LW: This is a necessary step to ensure that the network can handle high volumes of transactions without compromising performance. It also aligns with Solana’s ethos of rewarding participation and contribution to the network.
V1.18 update, QUIC, fee market & priority fee system, Agave validator client:
LW: These updates have already demonstrated improvements in transaction success rates and network efficiency. By introducing more sophisticated transaction prioritization and fee structures, Solana can better handle periods of high demand while maintaining its edge in transaction speed.
Solana DeFi TVL grew by 26% Q0Q to $5.7 billion
What are your thoughts on the centralization risks? For instance, there are concerns about Solana dApp Store centralization. Given the small number of validators, isn’t centralization threatening stability? The domination of vote transactions, which comprise 85% of network activity, exacerbates centralization concerns.
LW: While the centralization of validators is a valid concern, we are confident that the ongoing efforts to decentralize the network, increase the number of validators, and diversify client software like Firedancer will mitigate these risks. Solana’s focus on reducing vote transaction dominance is also key to ensuring that the network remains healthy and decentralized.
Concerns about decentralization are difficult to address as specific metrics or quantifiable measurements are rarely used. Four mining pools currently control over 75% of Bitcoin’s hashrate, but that doesn’t mean Bitcoin is centralized.
Solana’s liquid staking rate increased 31% QoQ to 8.4% in Q3 2024
Fundamentally, we have seen these networks adapt to centralizing forces. Network participants are incentivized for the network to succeed and tend to act as such.
As it stands, we feel more confident in Solana’s ability to remain decentralized through the use of dPOS [delegated proof of stake] and MeV tip sharing [maximum extractable value is a measure of the profit miners/validators make from ordering transactions], compared to the topology of some other networks, which is trending towards a small number of LST [liquid staking tokens] pools controlling oversized amounts of stake.
29 Solana projects raised a combined $173 million – a 54% QoQ increase
New to Solana? Here’s a technology primer and explanation of key developments
Firedancer Validator Client:
A new validator client by Jump Crypto aims to boost Solana’s transaction throughput from 50,000 transactions per second to over 600,000 tps.
Firedancer significantly enhances Solana’s scalability, potentially increasing throughput to between 0.6 and 1.2 million tps. This client is expected to roll out in 2025, with smaller versions released beforehand.
QUIC:
Solana adopted the QUIC protocol to mitigate spam and DDoS attacks, which is part of the ongoing evolution of its Gulf Stream transaction forwarding protocol.
Fee Market and Priority Fee System:
Solana has implemented a fee market and priority fee system to balance network load. This ensures that regular transactions are processed efficiently while allowing high-priority transactions to proceed quickly.
Agave Validator Client:
Developed by Anza, Agave is a fork of the Solana Labs validator client, which aims to improve network performance and reliability.
Solana is becoming a hub for DePIN applications, hosting Helium, Hivemapper, Render and Teleport
Solana strategic developments
Builder Interest: Interest in Solana among startup founders has doubled in 2024, marking the highest increase among all blockchains. Solana is now second in builder interest behind Ethereum.
Developer Growth: The developer community has grown significantly, with a 14% increase from 2023, indicating a strong recovery and growth post-FTX collapse
According to a16z’s State of Crypto 2024 report, startup founders are twice as likely to choose Solana as last year, with interest rising from 5.1% to 11.2%, marking the highest increase among all blockchains.
Solana Seeker Phone: Set to launch in mid-2025, this phone is designed for crypto-centric users, offering exclusive features and earning opportunities. It will be priced at $500 and available in 57 countries, focusing on Southeast Asia.
Seed Vault Wallet: A mobile-centric wallet that enhances user experience for on-chain transactions, similar to Apple Pay.
Solana dApp Store: Provides a decentralized alternative to traditional app stores, allowing developers to retain all their revenue and incentivize users with unique rewards
All sources can be found in the response generated by Messari AI Co-pilot and verified by Cryptonews.com analysts and in the Messari State of Solana Q3 2024 report.
Sol Strategies trades OTC under the CYFRF ticker on the NYSE and HODL on the Canadian Securities Exchange.
Disclaimer: This article does not constitute investment advice. All information provided here is solely for informational purposes. Capital at risk.
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