Why we are bullish on Solana

Not investment advice.

Introduction

Solana is an ultrafast, low latency, high performance blockchain with smart contract functionality. Using an innovative approach to timekeeping called Proof of History, Solana can achieve subsecond global state finality and transaction throughput of over 50k tps without compromising decentralization or security.

  • Low cost (Avg txs fee is $0.0007)
  • Composability (High performance without layer 2s/sharding)
  • Top tier ecosystem partners
  • Decentralized and secure

Scalable composability is not possible with sharding/layer 2s

There are real solutions bringing scalability to blockchains via layer 2 solutions or sharding. However, the native layer 1 scalability of Solana offers a level of composability not possible when transaction processing is segregated across different layers or shards. Defi has proved how important composability is especially with regard to atomic multi-step transactions. Over time, many of these transactions will grow in complexity, value, and volume, requiring subsecond finality and high throughput. These features cannot be supported by sharding or layer 2s. Solana can process at scale on a single layer 1- with transaction finality that meets institutional requirements.

Solana as a Layer 2

As dApps consider Layer 2s for scaling solution, Solana offers a unique value proposition beyond performance. Building on a layer 1 blockchain as a layer 2, applications can benefit from native layer 1 features like fiat on/off ramps, native stable coins, and composability with the entire layer 1 ecosystem. Without fiat onramps on any EVM layer 2s, new users must first transfer funds through Ethereum, costing (~$50 ), while the same onboarding on Solana costs less than 1 cent. Solana will have more net composable functionality than any layer 2 with a smaller native ecosystem.

Better developer experience

Solana’s high-performance layer 1 blockchain drastically simplifies the developer experience.

Strategic ecosystem advantage

Solana has been making calculated partnerships to build out the foundations of a vibrant ecosystem. Solana natively supports both USDC and USDT — two key building blocks of decentralized finance (Algorand and Ethereum are the only other blockchains that support both assets). Another key to a healthy ecosystem is strong on-chain liquidity — Jump Trading will be market making on the Solana-based decentralized exchange platform, Serum. Additionally, Solana is strategically aligned with Sam Bankman-Fried (Founder of Serum and FTX) and his burgeoning influential community. Solana is proving it can be incredibly compelling for many key teams across the ecosystem.

Solana ecosystem

Ultra-high-performance dApps

There is huge potential to build out a new class of decentralized applications that can only be made possible by a high-performance scalable blockchain.

Projects building on Solana

Audius

Risk And Threats

On December 14th, 2020, the Solana network was down for approximately six hours. The network freeze was triggered by a known issue with the block repair path that can’t handle duplicates of the same block passed by the leader. The duplication in the first place was not properly filtered because of a newly discovered bug in the Turbine (block propagation protocol). A partial solution has been deployed to patch the new bug, with a full solution coming before the next release cycle(Postmortem). This disruption was serious and underscores Solana’s major risk; execution. Solana will need to demonstrate its sustained stability in production to succeed. Solana is scheduled to upgrade from its beta status in mid-2021.

Long Term Team

Solana was built from the ground up to be a scalable blockchain by a team with deep expertise in building high-performance distributed systems at scale. The founding team has been working together for over 15 years — this alleviates the significant risk of divergent visions that have fractured many early blockchain teams. Two of the founders Anatoly Yakovenko and Greg Fitzgerald along with many members of the core Solana team worked on Brew at Qualcomm, where they built the early market leader in mobile operating systems. They gained expertise in ensuring disparate systems could communicate with each other across the globe while supporting millions of users.

Solana Stats

Comparison of top protocols
Performance vs. decentralization
Solana validator map. Source: https://solanabeach.io/

Conclusion

Solana fills a major performance gap in the world of blockchains while remaining decentralized and composable. A bet on Solana is a bet that one day we will need fully decentralized systems that can support thousands of high-value complex transactions per second and that the chain that can support that scalability and finality today will accrue significant value.

“Because for DeFi to win, it can’t be decentralized OR fast OR cheap OR sophisticated OR innovative OR well-built OR have a large userbase. It needs to be all of those”.

— SBF (Twitter link)

A team of former consulting, Wall Street, private equity, government, and corporate veterans accelerating the blockchain revolution