Cockpit lit with blue and orange lights
Solana (SOL), the native token of the Solana blockchain that bills itself as the logical choice for commercial blockchains, has just crossed the $200 mark, and publicly traded Sol Strategies aims to be the catalyst for its leadership.
Before you start wondering, Sol Strategies (formerly Cypherpunk Holdings)’s role in the Solana blockchain goes beyond Microstrategy’s role in the Bitcoin boom, which is similar to the role of Bitcoin ETFs. Sol Strategies is an investment management firm and a major validator of Solana transactions, meaning that Sol Strategies shareholders not only receive revenue from its “mining” activities by verifying transactions, but they also stand to benefit from planned acquisitions of the Solana ecosystem.
The company’s strategy stems from its confidence in the capabilities and efficiency of the Solana blockchain, so we reached out directly to Leah Wald, CEO of Sol Strategies, and asked her important and detailed questions about the blockchain’s performance, development plans, and how its plans can enable it to achieve its quest to provide the highest standards of decentralized blockchain systems and extend them to traditional sectors.
As expected, Sol Strategies has done a thorough study on how Solana works, making them one of the best-positioned entities to explain upcoming developments on the roadmap, such as the Firedancer update and the Solana smartphone.
.@solstrategies_ CEO @LeahWald highlights surging institutional interest in SOL staking, with top firms like 3iQ and VanEck diving in. As Solana grows, so does demand for scalable, staked ETPs—a game-changer for institutional DeFi adoptionhttps://t.co/C2eEvMskY1
— Tony G (@TonyGuoga) October 29, 2024
A map filled with cryptocurrency logos showing the diversity of the Solana ecosystemIncomplete map of the Solana ecosystem, source: Messari
Solana’s DeFi TVL grew by 26% QoQ to $5.7 billion, ranking it third among networks, surpassing Tron in late September.https://t.co/kXnnp1RHQi pic.twitter.com/Oa1eTIr7he
— Sol Strategies (CSE: HODL | OTC: CYFRF) (@solstrategies_) November 7, 2024
Are Solana transaction network outages forgotten?
We started our interview by reviewing the Solana transaction network’s history of documented outages, which is the worst thing that can happen to any blockchain system. Trying to run a decentralized peer-to-peer transaction network without a middleman taking a cut of its lower transaction fees compared to others will not succeed if the network is prone to frequent failures.
As we mentioned earlier, the Solana transaction network has a history of malfunctions and security issues. It has experienced 9 complete or partial failures since its launch, and transaction congestion is one of the major problems it faces. Will Solana be able to provide radical solutions to these problems?
Given its current performance, Solana still needs some improvement, and in terms of network congestion and transaction failures (Txs), Jupiter notes that the transaction failure rate sometimes reaches 83%.
It is worth noting that network congestion has sometimes led to transaction failure rates of up to 75%. For example, the transaction success rate over the past 30 days has been around 62%, and over the past 30 days through October 17, the actual average number of transactions per second (TPS) was 758, but the official Solana browser indicates that it is around 3,561 TPS at the time of writing.
On the other hand, the Ethereum transaction network is slow and expensive, as it can only complete between 15 and 30 transactions per second, although the Surge upgrade aims - in theory - to process 100,000 transactions per second.
Solana blockchain transaction completion rate, source: Solana Explorer
Review of the security and decentralization of the Solana transaction network, source: Messari
“The fact that Solana has been in a partial outage for 266 days (on February 6) reflects the ability of Solana to resolve these issues,” said Leah Wald. “As for the failure rate, it may not be related to the experience of regular users, but rather to spread traders or high-frequency scalping. When we tested the network for normal institutional use, our experience was positive and we did not see any failures.”
Solana has also faced documented challenges such as frequent outages and transaction congestion, which are obstacles for any network trying to improve its performance, but its team has made significant progress in addressing these issues, especially with recent upgrades that have improved the network’s resilience and reduced the possibility of future outages.
While scalability is another issue for layer-one blockchain solutions, Solana’s roadmap looks very promising. The continued development of solutions like Firedancer and improved transaction processing give us confidence that the network will address these issues in the future.
Solana Financial Data Overview, Source: Messari
We asked Leah Wald for her thoughts on efficiency improvement solutions:
The new Firedancer transaction validator is expected to boost the network’s current transaction processing capacity from the theoretical 50,000-600,000 to the 1 million transaction per second mark. When tested, the C-based Firedancer update was able to process over 1 million transactions per second, providing the necessary diversity. However, implementing Firedancer faces significant challenges, most notably distributing confirmed transactions across the transaction network, improving the performance of the consensus algorithm, and increasing transaction completion rates to prevent fraudulent practices and distributed denial of service (DDoS) attacks.
Leah Wald: Firedancer looks set to have a huge impact. It’s written in C, which will provide the necessary diversity and improve transaction completion rates as we’ve seen in our testing. We’ll also be working on tackling the challenges of its implementation—such as publishing confirmed transactions on the network and improving the performance of the consensus algorithm—and we believe these solutions can cement Solana’s position as a leader in high-performance blockchain infrastructure.
Quality of service thanks to the mortgage mechanism:
Leah Wald: This is an important step to ensure that the network can handle massive transaction volumes without impacting performance, and it is in line with Solana’s ethos of rewarding participants for their contributions and efforts in maintaining the stability of the network.
V1.18 (or QUIC) update, transaction fees, priority transaction completion for higher fees, and Agave transaction validator program:
Leah Wald: These updates have improved transaction processing and network efficiency; by introducing innovative ways to prioritize transactions and structure fees, Solana can better handle periods of high demand and maintain its speed in processing transactions.
Total value locked within the Solana ecosystem, up 26%, continues to grow quarter-on-quarter to now stand at $5.7 billion
What are your views on the risks of centralization? For example, there are concerns about the centralization of Solana’s dApp store. Given the small number of validators, doesn’t centralization pose a threat to the stability of the network? Also, the dominance of voting transactions, which account for 85% of the network’s activity, exacerbates concerns about centralization.
Leah Wald: While validator centralization is a legitimate concern, we are confident that ongoing efforts to decentralize the network, increase the number of validators, and diversify validation software—such as Firedancer—will mitigate these risks. Solana’s focus on reducing the control of voting transactions is essential to ensuring the sustainability and decentralization of the blockchain.
Concerns about decentralization are difficult to address, as there are rarely any specific or measurable metrics used in this area. Although four mining pools currently control more than 75% of Bitcoin’s hash rate, this does not make it centralized.
Solana Flexible Mortgage Rates Up 31% QoQ to 8.4%
Simply put, networks have shown their ability to adapt to central forces, as network participants care about their success and tend to continue supporting them.
From now on, we feel more confident that Solana can survive as a decentralized network by operating under a delegated stake (dPOS) algorithm and sharing the maximum extractable value (MeV) fee—a measure of how profitable miners/validators are from arranging transactions—than other transaction network structures, which tend to have a small number of flexible stake (LST) pools controlling staked amounts.
92 projects on Solana raise $173 million, up 54% QoQ
New to Solana? Here’s a technical primer and explanation of the major developments.
Firedancer Transaction Auditing Software:
A new validator software developed by Jump Crypto, Firedancer aims to increase the number of completed transactions from 50,000 transactions per second to over 600,000 transactions.
Firedancer will also significantly increase Solana's scalability, increasing throughput from 0.6 million transactions per second to 1.2 million, and is expected to launch in 2025 with limited versions launching before that year.
QUIC UPDATE:
Solana has started using the QUIC protocol to prevent hacking attempts and distributed denial of service (DDoS) attacks, and is part of the Gulf Stream transaction transfer protocol.
Fee Market and Transaction Priority Mechanism:
Solana has created a fee market and transaction priority system to address the network's transaction load, ensuring that regular transactions are processed efficiently, while high-priority transactions are processed quickly.
Agave Transaction Auditing Software:
Developed by Anza, Agave is an update to Solana's transaction auditing labs, aiming to improve the performance and reliability of the transaction network.
Solana Becomes Decentralized Physical Infrastructure (DePIN) Hub, Hosts Helium, Hivemapper, Render, and Teleport
Solana's Strategic Developments:
Developer Interest: Startup founder interest in Solana has doubled in 2024, with the highest interest growth rate of any blockchain network, with Solana now ranked second on the developer interest list after Ethereum.
Growing Developers: The developer community has seen a remarkable growth of 14% since 2023, reflecting its strong recovery and growth after the collapse of the FTX platform.
According to a16z’s State of the Industry 2024 report, startup founders are more than twice as likely to choose the Solana blockchain compared to last year, with interest rising from 5.1% to 11.2%, indicating that it is enjoying increased interest compared to other blockchain networks.
Solana Seeker Phone: Designed for crypto-minded users, this smartphone offers exclusive features and opportunities. It is planned to be launched in 2025, will be priced at $500, and will be available in 57 countries, with a focus on Southeast Asia.
Seed Vault: A mobile wallet similar to Apple Pay that aims to improve user experiences when transacting on the blockchain.
Solana Decentralized App Store: A decentralized alternative to centralized app stores, it allows developers to keep their profits and incentivizes users by giving them unique rewards.
You can find all the sources in the Messari AI Co-pilot response verified by Cryptonews.com analysts, and in Messari’s Solana Q3 2024 State of the World report.
Finally, it is worth noting that Sol Strategies shares are traded on over-the-counter (OTC) desks under the symbol CYFRF on the NYSE and HODL on the Canadian Securities Exchange.
