Solana is a highly scalable decentralized blockchain designed with a unique method of ordering transactions that greatly improves its transaction throughput so that it consistently processes over 2,500 transactions per second. It claims to be able to process 50,000 transactions per second.
The power of Solana cheap transactions is felt when the time comes to pay transaction fees, allowing users to move funds around the network for a fraction of a cent. By comparison, the average transaction fee on the Bitcoin network is around $ 1.80, even after falling nearly 58% this year. Meanwhile, Ethereum gas fees average $ 22 and more per transaction.
Although Solana has extremely high transaction throughput, some have suggested that its developers prioritized scalability over security after suffering a 17 hour downtime that required the collaboration of its engineers and 1,000+ validators to overcome it.
Solana attributed the failure to a denial-of-service attack aimed at a first decentralized exchange offer (IDO). According to a contribution from the Solana Foundation, the botting activity overwhelmed the network with a transaction load of 400,000 per second, which caused Solana validators to crash after running out of storage.
Recently, Solana was hit by another denial of service attack that significantly slowed the network but did not stop it. Speaking to Cointelegraph, Austin Federa, Head of Communications at Solana Labs, clarified that the latest outage was due to a series of transactions during an IDO that “ended up in a Solana block that was consuming an inordinate amount of computing power “.
Federa added that “the computation for these types of transactions was not properly measured by the network and blocks were taking much longer to process than the network expected”. However, he pointed out that the network does not go down anywhere and can always be verified independently, adding:
“The Solana term is a new design. It doesn’t use EVM [Ethereum Virtual Machine] and a lot of innovation has been done to ensure users have the cheapest fees, but there is still a lot to be done about the run time. “
Work to improve transaction measurement has already started, Federa said. Data showed that developers got to work after Solana’s recent outage, with daily GitHub submission rates quickly surpassing those of rivals Polkadot and Cardano.
In the eyes of some industry participants, the damage may already have been done, as while transactions are cheap, some users prefer to pay a premium to ensure their transactions will definitely go through.
Are Solana failures worrying?
Problems like outages are to be expected with any project emerging, especially one trying to solve a problem that some believe is inherent in public blockchains: scalability. Speaking to Cointelegraph, Sergey Zhdanov, Chief Operating Officer of EXMO UK crypto exchange, said that Solana’s secret is the consensus mechanism for the proof of the story.
For Zhdanov, denial-of-service attacks and similar outages “don’t really affect the trust of the network” and should be ignored. If investors were worried about such hiccups, he said they would have given up Ethereum by now.
Critical vulnerabilities, such as the possibility of a 51 percent attack, should be feared by investors, added Zhdanov. Marie Tatibouet, Chief Marketing Officer at the cryptocurrency trading platform Gate.io, seems to disagree. Speaking to Cointelegraph, Tatibouet said the Solana outages “hurt trust” as the network “has suffered from centralization issues more than once this year,” showing the team “prioritized scalability over security”. She added that investors and users should be concerned about Solana’s failures:
“The whole idea of ’Ethereum killers’ is to have networks that can handle high throughput. What does it tell you about the network that it keeps failing when there is high demand? “
Tatibouet added that while she “really likes” the team behind Solana and believes that they will overcome the problems behind these outages in the near future, there are “inherent problems in the network itself.”
Additionally, recent outages have been linked to concerns about Solana centralization. The network relies on the Solana Foundation to develop core nodes on the blockchain, while networks like Ethereum have multiple core node developers. While anyone can become a validator on Solana, a node can be expensive to run due to the high transaction throughput of the network.
Such costs inevitably lead to some degree of centralization, which some find a favorable compromise for fast, inexpensive transactions. For others, decentralization is sacred as it could help prevent collusion or other types of attacks on the network.
Speaking to Cointelegraph, Noelle Acheson, Head of Market Insights at Crypto Prime Broker Genesis Trading, pointed out that the Solana network is still young as its mainnet went live in early 2020. Acheson believes that despite its “strong application and development growth” and the breathtaking price increase since the beginning of the year “one has to ask whether its” relative youth and thus the higher risk is reflected in the price “.
She added that it is important to remember that if something goes wrong with Solana or any other public blockchain, we will know about it immediately, since anyone can check what is going on without a press release or customer service response having to wait. That transparency, Acheson said, is a benefit that crypto investors have that technology investors cannot enjoy.
Likewise, the “passionate community has so far been able to solve problems”. As an example, Acheson cited identity verification developer Civic, who released a free tool designed to help reduce the bot activity that caused Solana’s 17 hour downtime.
While being a very new blockchain means the risks are higher, that higher risk comes with an added bonus, she said:
“The youth of the network does imply a higher risk, but that brings with it the possibility of a higher reward.”
Acheson suggested that investors essentially “rely not only on the underlying technology, but also on the strength of the community.” The Solana community has proven to be “passionate and committed, as the sold-out success of their first developer conference in November” proved.
Choices abound
Looking ahead, Acheson said it was possible that Solana will have further failures as “every new technology carries this risk”. For her, this means “that Solana is not yet ready to bear the weight of the capital markets on her shoulders. But she doesn’t expect that at the moment either. “
The executive added that Ethereum has been running successfully for much longer and is still considered experimental, especially given the upcoming upgrade to a proof-of-stake consensus algorithm. Investing in crypto-protocols, Acheson said, is “about experimentation and choice.”
Those who are dissatisfied with Solana have no shortage of other options. The upcoming upgrade from Ethereum to Ethereum 2.0 is intended to help significantly scale the network through sharding, which divides the network into different segments (shards) to reduce the load on each node.
Related: Ethereum Upgrades: A Beginners Guide to ETH 2.0
Some have suggested that sharding could help Ethereum process thousands of transactions per second and cut transaction fees significantly. There are other competitors for investors and users to consider as well, including Binance Smart Chain, Polygon, Cardano, and Avalanche.
According to Tatibouet, over time, projects will continue to favor speed over security – “to their own detriment” – meaning Solana “will continue to receive a healthy influx of projects”. Schdanov addressed the other options available to investors by saying that there is no perfect solution, at least for now.
Regarding Binance Smart Chain, he outlined that validators have complained that they are having trouble keeping their nodes in sync and are finding poor general developer support. Zhdanov concluded:
“Unfortunately there are no perfect projects, everyone struggles with something, although in my opinion Solana is definitely the unicorn of our time: both from a technical point of view and from the active community.”
It remains to be seen whether Eth2 will help Ethereum, whose native token is the second largest cryptocurrency by market capitalization, to maintain its dominance. Until the market launch, new trends will emerge and the market will differ significantly. But it is now clear that smart contracts and decentralized applications will stay here.
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