Anatoly Yakovenko on Solana's Future and Recent Momentum

In a recent interview at the Permissionless II conference, Anatoly Yakovenko, co-founder of Solana, shared his insights on the blockchain's recent developments, future plans, and the evolving narrative surrounding the project. This comprehensive discussion covered a wide range of topics, from recent high-profile partnerships to technical innovations that promise to reshape the Solana ecosystem.

Solana's Recent Momentum

Solana has been making waves in the cryptocurrency world with a series of significant announcements and partnerships. Yakovenko expressed excitement about several recent developments that have bolstered Solana's position in the blockchain space.

MakerDAO's Consideration of Solana

One of the most surprising revelations came from MakerDAO, a prominent player in the Ethereum ecosystem. Yakovenko shared his enthusiasm about MakerDAO's announcement that they are considering Solana as a stack for their own application chain. This move is particularly significant as it demonstrates the growing recognition of Solana's technical capabilities beyond its own ecosystem.

Yakovenko emphasized the importance of open-source development, stating:

"It's not even about Solana the mainnet or the token or anything like that, but really about open source and the fact that we built all this awesome open source code and now it can be used by other folks in the Ethereum ecosystem or whatever ecosystem, you know, for whatever purposes they want."

This openness to collaboration and cross-chain development highlights Solana's commitment to advancing the broader blockchain industry.

Visa's Integration with Solana

Another major announcement that garnered attention was Visa's integration with Solana for cross-border transactions. Yakovenko explained the significance of this partnership, noting that it aligns with his vision of making financial rails as cheap and efficient as possible.

He elaborated on the potential impact:

"I think of everything, you know, that we're building is almost like, it's like almost like logistics, right? You want your roads as flat as possible to use the least amount of gas for cars and like none of the stuff actually like creates value for the world. If it's inefficient or there's delays, it adds attacks and, you know, to the real value creators."

The Visa integration leverages USDC on Solana, which can settle transactions in about 400 milliseconds, offering significant improvements over traditional cross-border payment methods.

Solana's Approach to Fees and Value Capture

Yakovenko addressed the ongoing debate in the cryptocurrency community regarding fee structures and value capture at the Layer 1 (L1) level. He presented Solana's unique perspective on this matter, which differs from some other blockchain projects.

Low-Fee Philosophy

Contrary to the belief that L1 blockchains should focus on value capture through higher fees, Solana maintains a commitment to keeping fees as low as possible. Yakovenko explained the reasoning behind this approach:

"I want like a global like giant state machine that runs many different applications all in one shared system all with one like atomic settlement guarantees as fast as possible and as cheap as possible."

This philosophy stems from Yakovenko's background in performance optimization and his vision for a global, efficient financial system.

Value Accrual Through Application Diversity

Rather than relying on high fees for value capture, Solana's model focuses on accruing value through the diverse range of applications built on the network. Yakovenko believes that in a shared environment with abundant resources, the infrastructure layer should extract minimal value, allowing applications to generate the most revenue and fees.

He stated:

"The infrastructure layer in that environment should be as cheap as possible and extract the least amount of value."

This approach aims to foster innovation and encourage a thriving ecosystem of decentralized applications.

Local Fee Markets: Solana's Unique Solution

While Solana maintains a low-fee environment overall, it has implemented a sophisticated system called local fee markets to address congestion and prioritize transactions efficiently.

Addressing Hotspot Contention

Yakovenko described how local fee markets work to solve the problem of hotspot contention, where many users compete for access to the same state:

"If you have a hotspot that everyone wants to access, it's like, you know, imagine everyone in this room wanted to flip a light switch in this room. You would all rush to the light switch."

Local fee markets allow Solana to isolate these hotspots and prioritize transactions based on fees within specific buckets of similar operations.

Practical Implementation

The local fee market system was put to the test during recent high-traffic events, such as the Madlads NFT mint and the Helium network migration. Yakovenko proudly noted:

"We actually saw isolation in practice. Nothing really fees didn't spike. We saw the NFT mint progress, you know, as it should, and it had no impact on the helium migration that was happening concurrently."

This successful real-world application demonstrated the effectiveness of Solana's approach to managing network congestion and prioritizing diverse types of transactions simultaneously.

QUIC and Stake-Weighted QoS

To further enhance network performance and security, Solana has implemented QUIC (Quick UDP Internet Connections) and stake-weighted Quality of Service (QoS) mechanisms.

QUIC for Traffic Control

QUIC allows Solana to limit and control the traffic hitting network nodes, preventing potential denial-of-service attacks. Yakovenko explained:

"We're using UDP before that meant that bots or, you know, users, whatever you want to call them, they could generate as much traffic as they wanted to."

By implementing QUIC, Solana can better manage network traffic and protect against potential attacks.

Stake-Weighted QoS

The stake-weighted QoS system ensures fair access to network resources based on the amount of SOL tokens staked by participants. Yakovenko described it as follows:

"If you have half of a percent of stake or whatever, some very small percentage of the stake, what quality of service does is it guarantees that all the rest of the nodes, stake or unstake cannot saturate your channel to the other block producers such that you cannot send a message through."

This system provides a guarantee that even smaller stakeholders can participate effectively in the network, promoting decentralization and fairness.

Firedancer: A Game-Changing Second Client

One of the most exciting developments in the Solana ecosystem is the upcoming release of Firedancer, a second client implementation for the Solana network.

Importance of Multiple Clients

Yakovenko emphasized the critical nature of having multiple client implementations for a decentralized system:

"I think the thing that I'm the most jealous of the Ethereum ecosystem of is the fact that there's multiple client implementations of the software. And this is really, really critical, I think, for any decentralized system to achieve because reality is that softwares are done by humans."

Multiple clients reduce the risk of catastrophic bugs affecting the entire network, as it's highly unlikely that separate teams would make the same mistake in different implementations.

Firedancer's High-Performance Design

Developed by a team of high-frequency trading experts from Jump Crypto, Firedancer is built with performance in mind. Yakovenko described the team's approach:

"These are folks that have built systems that handle terabits worth of data for trading. So they really understand the kind of optimizations that you need to make to make a high-performance system."

The Firedancer client is designed to maximize hardware utilization, with components demonstrating the ability to handle over 10 gigabits of traffic on common hardware configurations.

Potential Performance Improvements

Yakovenko highlighted the significant performance gains that Firedancer could bring to the Solana network:

"In a very, you know, like common system that already runs Solana, their software improvements will probably show 10x improvement in performance and the exact same system."

These improvements could lead to lower hardware requirements for running Solana nodes, making the network more accessible and potentially increasing decentralization.

Addressing Hardware Requirements

A common criticism of Solana has been its perceived high hardware requirements. Yakovenko took the opportunity to clarify some misconceptions and highlight ongoing improvements in this area.

Bandwidth as the Primary Bottleneck

Contrary to popular belief, Yakovenko explained that the main limiting factor for running a Solana node is not computational power but bandwidth:

"The biggest real bottle like in all these systems, even if we had perfect implementations is bandwidth. It's actually egress bandwidth that each node sends out."

He noted that running a high-stake node might generate about 200 terabytes of bandwidth per month, which can be costly in cloud environments but much more affordable in modern data centers or even on home fiber connections.

Decreasing RAM Requirements

Yakovenko also addressed improvements in memory usage:

"We recommend like 256 gigabytes of RAM, but a lot of improvements have been done in the last release. And we see validators run in steady state under 48 gigs of RAM."

These ongoing optimizations are making it increasingly feasible for a wider range of individuals and organizations to participate in running Solana nodes.

Solana's Role in Payments and Adoption

The discussion touched on Solana's growing role in the payments sector and the path to mainstream crypto adoption.

Visa and USDC Integration

Yakovenko expressed excitement about Visa's integration of USDC on Solana for cross-border transactions, seeing it as a step towards mainstream adoption:

"When you start seeing those revenues, at least hit 5%. Like, I think you'll actually start crypto means that hit mainstream."

He emphasized the importance of these early deployments in testing what works and where adoption is gaining traction.

The Long Tail of Payment Applications

While major partnerships like Visa are crucial, Yakovenko also highlighted the importance of smaller startups in the ecosystem:

"From that kind of like bigger companies like circle and like Visa that generate these bigger info things, you have a whole long tail of startups like tip link, otter and like code that build awesome great payments apps that you know, folks can use and like start using every day."

This diverse ecosystem of payment applications contributes to the overall growth and adoption of Solana in the financial technology space.

Decentralized Physical Infrastructure Networks

Yakovenko expressed particular enthusiasm for projects that connect blockchain technology with physical infrastructure, such as Helium and HiveMapper.

Helium's Innovative Approach

He described Helium's model of incentivizing the deployment of wireless network infrastructure:

"They know exactly where every user that's using T-Mobile in the Miami area is actually like using data the most. So they know exactly where they're paying T-Mobile the highest amount for data. And they can change the incentivization on the helium network to increase the rewards in that in that spot."

This crypto-economic model allows for efficient and targeted deployment of network infrastructure without the overhead traditionally associated with such projects.

HiveMapper's Decentralized Mapping

Yakovenko also highlighted HiveMapper as an innovative project leveraging crypto incentives:

"They stick cameras on their cars and start collecting street view data. And because these are folks who are constantly driving, unlike a Google Street View car, they actually see 200 times faster updates for their data in Hive Mapper."

He noted that HiveMapper has already achieved 8% global road coverage with just about a thousand drivers, demonstrating the power of decentralized approaches to data collection and infrastructure development.

Lessons from Ethereum and Solana's Unique Contributions

Yakovenko acknowledged the valuable lessons that Solana can learn from the Ethereum ecosystem while also highlighting areas where Solana is breaking new ground.

Ethereum's Open Source Ethos

He praised the Ethereum community's commitment to open source development and research:

"The best parts of the Ethereum community are the ones that are really focused on open source development, trust minimization and research and development like folks that go out of their way and write really deep insightful papers and really explain what they're doing and then publish open source code."

This open approach to development and research has been instrumental in advancing the entire blockchain industry.

Solana's Innovations

Yakovenko pointed out some of Solana's unique contributions, particularly in terms of state growth and account management:

"We've solved some really interesting challenges the way that SVM is designed. It's not as expensive to growth state in the virtual machine. We don't run into the exact same bottlenecks as the EVM does."

He encouraged the Ethereum community to examine and potentially adopt some of these innovations to improve their own ecosystem.

Solana's Five-Year Vision

Looking to the future, Yakovenko shared his ambitious five-year vision for Solana, focusing on a key technical innovation: multiple leaders per slot.

Multiple Leaders Per Slot

Yakovenko explained the concept and its importance:

"What I really really care about is this idea that when I submit a transaction that my rights are not are basically as fair as possible. So if I have a validator with like 0.001% of stake, I get 0.001% of bandwidth, I can submit my transaction, I have quality service guarantees and then my priority my prioritization actually supply and then they get into the block in a fair way and then I receive the data as fast as possible."

This innovation aims to create a more equitable and efficient system for transaction processing and block production.

Global Synchronization

The ultimate goal of this development is to create a globally synchronized state machine that operates as fast as physics allows. Yakovenko painted a vivid picture of the potential impact:

"If I am in Singapore and some like crazy market event happens, it's going to move, you know, change everything about the world's finance. That news travel, that news has to travel speed of light through fiber to a Bloomberg terminal in New York. At the same time, I want a state transition, that transaction to go from Singapore to the closest block producer."

This level of synchronization could potentially eliminate arbitrage opportunities and create a more efficient global financial system.

Conclusion: Solana's Open Invitation

In closing, Yakovenko emphasized the open and collaborative nature of the Solana ecosystem. He encouraged developers and enthusiasts to explore Solana without fear:

"It's just a bunch of open source software, so you don't have to fear it. There's a hackathon happening right now. So if you want to build your first Solana app, just go join the hackathon."

This welcoming attitude, combined with Solana's technical innovations and growing ecosystem, positions the blockchain for continued growth and adoption in the coming years.

As Solana continues to evolve and address challenges, it remains focused on its core mission of creating a fast, efficient, and accessible blockchain infrastructure. With ongoing developments like Firedancer and the vision for multiple leaders per slot, Solana is poised to push the boundaries of what's possible in blockchain technology.

Facts + Figures

• MakerDAO is considering Solana as a stack for their own application chain, showcasing cross-ecosystem collaboration.
• Visa is integrating with Solana for cross-border transactions, utilizing USDC to settle transactions in about 400 milliseconds.
• Solana's local fee market system successfully managed high-traffic events like the Madlads NFT mint and Helium network migration simultaneously without fee spikes.
• Firedancer, Solana's second client implementation, is expected to show a 10x improvement in performance on the same hardware.
• Solana validators can now run in steady state under 48 GB of RAM, down from the previous recommendation of 256 GB.
• Running a high-stake Solana node generates about 200 terabytes of bandwidth per month.
• The total cost of running a Solana node in a modern data center can be as low as $350 per month.
• HiveMapper has achieved 8% global road coverage with just about 1,000 drivers, updating data 200 times faster than traditional methods.
• Solana has successfully tested internal networks with 15 billion accounts, with snapshots reaching about 700 GB without impacting performance.
• Yakovenko's five-year vision for Solana includes implementing multiple leaders per slot to enhance fairness and efficiency in transaction processing.

Questions Answered

What is Firedancer and why is it important for Solana?

Firedancer is a second client implementation for the Solana network, developed by high-frequency trading experts from Jump Crypto. It's important because having multiple client implementations increases the security and resilience of the network by reducing the risk of a single bug affecting the entire system. Firedancer is designed for high performance and is expected to show a 10x improvement in performance on the same hardware currently running Solana.

How is Solana addressing the criticism of high hardware requirements?

Solana is actively working to reduce hardware requirements for running nodes. Recent improvements have allowed validators to run in steady state under 48 GB of RAM, down from the previous recommendation of 256 GB. Additionally, Yakovenko clarified that the main bottleneck is actually bandwidth, not computational power. The total cost of running a Solana node in a modern data center can be as low as $350 per month, making it more accessible than many believe.

What is Solana's approach to fees and value capture?

Solana maintains a philosophy of keeping fees as low as possible, contrary to some other blockchains that focus on value capture through higher fees. Yakovenko believes that the infrastructure layer should extract minimal value, allowing applications built on top of Solana to generate the most revenue and fees. This approach aims to foster innovation and encourage a thriving ecosystem of decentralized applications.

How does Solana's local fee market system work?

Solana's local fee market system addresses the problem of hotspot contention by isolating areas of high demand and prioritizing transactions based on fees within specific buckets of similar operations. This allows the network to handle diverse types of transactions simultaneously without causing overall fee spikes. The system was successfully tested during high-traffic events like the Madlads NFT mint and Helium network migration.

What is Anatoly Yakovenko's five-year vision for Solana?

Yakovenko's five-year vision for Solana centers on implementing multiple leaders per slot. This innovation aims to create a more equitable and efficient system for transaction processing and block production. The ultimate goal is to create a globally synchronized state machine that operates as fast as physics allows, potentially eliminating arbitrage opportunities and creating a more efficient global financial system.