Liquid Stake with compassSOL for an 7.50% APY from staking, MEV + fees

Enjoy the freedom of liquid staking in Solana Defi while delegating your stake to the high performance Solana Compass validator. Stake or unstake at any time here, or with a Jupiter swap.

Benefit from our high staking returns and over 2 years experience operating a Solana validator, and receive additional yield from priority fees + MEV tips

Earn 6.5% APY staking with Solana Compass

Help decentralize and secure the Solana network delegating your stake to us and earn an impressive 6.5% APY yield on your SOL, while supporting us to create new guides and tools. Learn more

Stake your SOL

  1. Click to connect your wallet
  2. Enter the amount you wish to stake
  3. Kick back and enjoy your returns
  4. Unstake from your wallet or our staking dashboard

Earn 6.5% APY staking with Solana Compass

Help decentralize and secure the Solana network delegating your stake to us and earn an impressive 6.5% APY yield on your SOL, while supporting us to create new guides and tools.

Learn more

The Solana End Game | Anatoly Yakovenko & Lucas Bruder

By Lightspeed

Published on 2024-04-24

Anatoly Yakovenko and Lucas Bruder discuss Solana's scaling solutions, upcoming features like async execution, and the future of MEV on the network.

The notes below are AI generated and may not be 100% accurate. Watch the video to be sure!

Introduction to Solana's Current State

Solana, one of the leading blockchain networks in the cryptocurrency space, has been experiencing significant growth and challenges in recent months. In this deep dive discussion, Anatoly Yakovenko, co-founder of Solana, and Lucas Bruder, CEO of Jito Labs, explore the current state of the Solana network and the solutions being developed to address various issues. The conversation covers a wide range of topics, from transaction congestion and network performance to future developments like async execution and the evolution of MEV (Miner Extractable Value) on Solana.

The Transaction Problem and Recent Network Issues

Over the past few months, Solana has faced challenges related to transaction congestion as on-chain volumes have exploded. Anatoly Yakovenko provides insight into the root causes of these issues:

"What started happening is you started seeing congestion around submission, like a user starting to submit a transaction, and there were a bunch of theories around why that was happening."

Initially, there were suggestions to implement economic solutions, such as increasing the minimum floor price for transaction submissions. However, further investigation revealed that the underlying issues were actually related to bugs in the network's quality of service (QoS) implementation.

Stake-Weighted QoS and Its Limitations

One of the solutions implemented to address network congestion was stake-weighted Quality of Service (QoS). This mechanism was designed to allocate network resources based on the amount of stake held by validators. However, the implementation faced some challenges and criticisms.

Lucas Bruder explains: "Ideally, stake-weighted QoS would have worked more. But it seems like there's definitely been an increase in performance in the quick server with some of the newer code that's being tested."

The stake-weighted QoS system aimed to create a more orderly way for transactions to enter the network, but it also introduced new complexities and potential centralization concerns.

The Networking Bugs and Their Impact

Anatoly Yakovenko emphasizes that many of the recent issues stemmed from bugs in the networking stack rather than fundamental design flaws:

"There were a bunch of folks that were advocating for an economic solution to this, which meant that you increase effectively the minimum floor price to submit a transaction to the point to where spam backs off. And what turned out was that... the underlying issues was actually that state-related QoS was busted due to bugs and how the server uses quick and stuff like that."

These bugs caused the network to behave unpredictably during periods of high congestion, making it difficult to pinpoint the exact cause of the problems. The Solana team has been working on identifying and fixing these issues to improve overall network performance.

Economic Solutions vs. Engineering Fixes

The discussion highlights an important debate within the Solana ecosystem: whether to address network congestion through economic incentives or by focusing on engineering fixes. Yakovenko argues that addressing the underlying bugs should be the priority:

"This is where like I think the economic, the economists in the Solana ecosystem, I think are maybe starting up the wrong foot right now is that there's just underlying bugs that are pretty obvious now to all the engineers involved in the networking stack. Once those are fixed, I think then we can kind of go revisit. There is probably economic issues too that can be improved and then like it will hopefully be obvious what they are and be straightforward to fix them."

This approach emphasizes the importance of having a stable and efficient base layer before implementing more complex economic models to manage network resources.

The Auction House Analogy

To better understand the challenges faced by Solana's transaction processing system, Yakovenko presents an analogy of an auction house:

"Think of that as the restaurant or the auction house. And then there's a line to get into the restaurant. And inside the restaurant you can have order and you can do priority and stuff like that. And you can give everyone a fair shot. But outside of the auction house it's the streets. It's wild. Anyone can do anything."

This analogy illustrates the difficulty in managing transaction submission and prioritization in a decentralized network, especially one with high throughput like Solana.

The Goal of Stake-Weighted QoS

Despite its limitations, the stake-weighted QoS system was designed with a specific goal in mind. Yakovenko explains:

"The goal there isn't to solve all the problems is to you have a leader and it's got a bunch of requests coming in from the public internet to connect to it. And those are just, I want to initiate a connection so I can send you transactions."

The system aims to distribute the problem of managing connections across the entire network, rather than relying on a single leader node to handle all incoming requests.

Criticisms of Stake-Weighted QoS

Several criticisms have been leveled against the stake-weighted QoS system. These include:

  1. A high threshold for activation (around 15,000 SOL)
  2. Potential centralization concerns
  3. Difficulty in enforcing the system at the protocol level
  4. Additional complexity for users and developers

Lucas Bruder addresses some of these concerns: "I think stake-weighted quality service in my mind is a short-term solution. I think everyone, at least as far as I know, everyone kind of agrees with that. It's fine given like the state of things."

The Future of Quality of Service on Solana

Both Yakovenko and Bruder agree that the current stake-weighted QoS system is not the final solution. Bruder suggests that a more sophisticated system may be developed in the future:

"I think on a longer time horizon it will be based on like what's about what's about ears care about the care about money they care about the economics of the chain how much are they making so they can like pay their server bills feed their family are they like doing things that are in the best interest of the network from like a long term time horizon."

This hints at the possibility of a reputation-based system or other metrics to determine resource allocation on the network.

Increasing Block Space and Network Capacity

One potential solution to network congestion is simply increasing the block space available for transactions. Yakovenko strongly advocates for this approach:

"If you're getting if the blocks are being fulled but the accounts are not hot awesome double the block space you're gonna double revenue like why wouldn't you do it like why wouldn't every validated be like all I have to do is have twice as many banking threads they probably already have the cores for that because we haven't doubled the block capacity since launch."

This suggestion highlights the potential for Solana to significantly increase its transaction throughput without major changes to the underlying infrastructure.

The Concept of Dynamic Block Size

The discussion touches on the idea of implementing a dynamic block size for Solana. This would allow the network to adjust its capacity based on demand automatically. However, Yakovenko cautions:

"You're relying on the hardware to actually be able to support it so you have to provision it ahead of time right there's like testing and all these other kind of put like a hard limit of this is as far as we've tested I don't know what happens after that it's probably not safe to increase it beyond that."

This highlights the need for careful testing and gradual implementation of any changes to block size or network capacity.

Async Execution: The Future of Solana

One of the most exciting developments discussed in the podcast is the concept of async execution. Yakovenko provides a detailed explanation of this potential future state for Solana:

"The quorum of the validators the only thing they control is the fork they pick forks they don't actually do anything else they don't need to do anything else they don't need to execute any transactions all they need to do is to vote and the only thing that they need to pick forks is the data for the blocks and to process the votes in those blocks."

This separation of consensus and execution could lead to significant improvements in network performance and scalability.

Benefits of Async Execution

The implementation of async execution could bring several benefits to the Solana network:

  1. Reduced computational requirements for validator nodes
  2. Faster block times and confirmations
  3. Increased flexibility in managing network resources
  4. Potential for higher transaction throughput

Yakovenko emphasizes the potential impact: "Once you have that that means you can reduce block times from 400 to 200 confirmations gets faster everything gets faster."

The Implementation Timeline for Async Execution

While async execution holds great promise, both Yakovenko and Bruder acknowledge that its implementation will take time. Yakovenko estimates:

"My guess is that like three right engineers from ons and fire dancer if we locked them in like a room for a week with some pizza and beer they could get it running and test that within a week and then like it'll take two years to like for it to go live because of the weird all the tail end kind of affects of this."

This timeline highlights the complexity of implementing such a significant change to the network's architecture.

The Role of Firedancer in Solana's Future

Firedancer, a separate implementation of the Solana protocol, is expected to play a crucial role in the network's future development. Lucas Bruder explains its potential impact:

"I think it shifts in a very positive way I think it's a um it's going to be rocky at first you know I hope it's good but I want to make sure people's expectations are set realistically that the team there is killer and they've been working closely with the ons a team but I think every software is bugs."

The introduction of Firedancer is expected to improve network performance and potentially accelerate the development of new features.

Benefits of Multiple Client Implementations

Yakovenko highlights an important benefit of having multiple client implementations like Firedancer:

"My hope is that the actual protocol development moves faster with both clients than with just one because the probability of that a single team shipping a bug that's catastrophic is is like too high so they have to move really carefully the audit cycle and everything else is much much much slower."

This diversity in client implementations could lead to faster and more robust protocol development for Solana.

Addressing the Rent Fee Issue

The podcast also touches on the issue of rent fees on Solana, which has been a point of contention for some developers. Yakovenko acknowledges the problem and discusses potential solutions:

"There's a SIMD that people are trying to get like create based on kind of some of the design ideas I had a while back basically the goal is like the the issue that the network has is it doesn't have a fixed size snapshot you want to you want to maximize again maybe set it as a constant or whatever but you want to set a maximum of the amount of state that the validators are expected to handle."

The proposed solution involves implementing a bonding curve based on state size and introducing a compression mechanism for inactive accounts.

The Concept of Restaking on Solana

The discussion also covers the topic of restaking, a concept that has gained traction in the Ethereum ecosystem. Lucas Bruder explains Jito's approach with Stake Net:

"Stake net is a way for liquid staking protocols to be run on Solana in an open transparent way and be controlled directly from governance."

This system aims to provide more transparency and control for liquid staking protocols on Solana.

The Future of MEV on Solana

Miner Extractable Value (MEV) is an important topic in the blockchain space, and the podcast explores how it might evolve on Solana. Lucas Bruder shares his vision:

"I think the end state of me v is like ultra transparent i think that's something that we've been doing pretty well at i think we can be a little more transparent about what valedators are doing what others are doing um i think you will have uh there will be like some auction involved as my guess."

This suggests a future where MEV extraction on Solana is more open and competitive, potentially benefiting users through increased transparency and options.

Solana's Approach to MEV

Anatoly Yakovenko emphasizes the importance of creating a competitive environment for MEV extraction:

"The Elle one's job i think is to maximize the competition of all these other kind of services running on it to prevent a parasitic kind of single service provider that's like screwing all the users right you want to you want to make sure that a user always has the option to go pick valedator a versus valedator b."

This approach aims to ensure that users have choices and that the MEV extraction process remains fair and beneficial to the network as a whole.

Conclusion: Solana's Path Forward

As Solana continues to grow and evolve, the challenges discussed in this podcast highlight the complex issues faced by high-performance blockchain networks. The solutions proposed, from fixing networking bugs to implementing async execution and rethinking MEV dynamics, demonstrate the ongoing innovation in the Solana ecosystem.

The insights provided by Anatoly Yakovenko and Lucas Bruder offer a glimpse into the future of Solana, showcasing the team's commitment to scaling the network while maintaining its core principles of high performance and low costs. As these developments unfold, Solana is poised to continue its trajectory as a leading blockchain platform for decentralized applications and financial services.

Facts + Figures

  • Solana has faced transaction congestion issues in recent months due to exploding on-chain volumes
  • Stake-weighted Quality of Service (QoS) was implemented to address network congestion, but faced limitations and criticisms
  • The current minimum stake threshold for QoS activation is around 15,000 SOL
  • Networking bugs, rather than fundamental design flaws, were identified as the primary cause of recent network issues
  • Solana's block capacity has not been doubled since launch, suggesting potential for significant throughput increases
  • Async execution could potentially reduce block times from 400ms to 200ms, increasing overall network speed
  • Implementing async execution is estimated to take about two years to go live after initial development
  • Firedancer, a separate implementation of the Solana protocol, is expected to improve network performance and accelerate feature development
  • The Solana team is considering implementing a dynamic rent fee system based on state size to address developer concerns
  • MEV extraction on Solana is expected to become more transparent and competitive in the future

Questions Answered

What caused the recent transaction congestion issues on Solana?

The recent transaction congestion issues on Solana were primarily caused by bugs in the networking stack, particularly in the implementation of stake-weighted Quality of Service (QoS). These bugs led to unpredictable behavior during periods of high network activity, making it difficult for transactions to be processed efficiently. The issues were not due to fundamental design flaws in the Solana protocol, but rather specific implementation problems that the team is actively working to address.

How does stake-weighted Quality of Service (QoS) work on Solana?

Stake-weighted Quality of Service on Solana is a mechanism designed to allocate network resources based on the amount of stake held by validators. It aims to distribute the problem of managing connections across the entire network, rather than relying on a single leader node to handle all incoming requests. Validators with higher stake are allocated more connections and bandwidth to the leader node. However, this system is considered a short-term solution and has faced criticisms regarding its activation threshold and potential centralization concerns.

What is async execution and how could it benefit Solana?

Async execution is a proposed future state for Solana where the consensus process (selecting forks and voting) is separated from transaction execution. In this model, validator nodes would only be responsible for maintaining the chain of blocks and votes, while separate nodes would handle transaction execution. This separation could lead to significant performance improvements, including faster block times, quicker confirmations, and potentially higher transaction throughput. It would also reduce the computational requirements for validator nodes, allowing for more flexibility in managing network resources.

What is Firedancer and how will it impact Solana's development?

Firedancer is a separate implementation of the Solana protocol being developed by a different team. It is expected to improve network performance and potentially accelerate the development of new features. Having multiple client implementations like Firedancer can lead to faster and more robust protocol development, as it reduces the risk of a single team introducing catastrophic bugs. While the initial integration of Firedancer may be challenging, it is anticipated to have a positive impact on Solana's overall performance and development pace in the long run.

How is Solana planning to address the rent fee issue for developers?

Solana is considering implementing a dynamic rent fee system based on state size to address developer concerns about high rent costs. The proposed solution involves using a bonding curve that adjusts the cost of state allocation based on the current total state size of the network. Additionally, a compression mechanism is being considered for inactive accounts, which would move rarely-used data to a separate, less expensive storage area. This approach aims to balance the need for efficient state management with developer-friendly costs.

What is the future of MEV (Miner Extractable Value) on Solana?

The future of MEV on Solana is expected to be more transparent and competitive. The Solana team aims to create an environment where multiple MEV extraction services can compete, giving users more options and preventing a single, potentially parasitic, service provider from dominating. This approach may involve implementing fast, frequent auctions for block space and ensuring that users can choose between different validators or MEV extraction methods. The goal is to make MEV extraction fair and beneficial to the network as a whole while providing users with transparency and choice.

How does Solana plan to increase its transaction throughput?

Solana plans to increase its transaction throughput primarily by expanding block space. The team recognizes that the network's block capacity hasn't been doubled since launch, suggesting there's significant room for improvement. They are considering implementing larger blocks or potentially a dynamic block size system that can adjust based on network demand. However, any increases in block size will be carefully tested and implemented gradually to ensure network stability and performance. Additionally, future improvements like async execution could further boost the network's capacity to process transactions.

What is Stake Net and how does it relate to liquid staking on Solana?

Stake Net is a system developed by Jito Labs to enable liquid staking protocols to run on Solana in an open and transparent way. It allows these protocols to be controlled directly through governance mechanisms. Stake Net addresses the need for on-chain data storage and delegation logic for stake pools, making it easier to manage and verify the performance of validators participating in liquid staking. This system is particularly relevant as the concept of restaking gains traction in the broader blockchain ecosystem, potentially setting the stage for more advanced staking derivatives on Solana.

Related Content

Solana Is Dead I Mert Mumtaz (Helius)

Mert Mumtaz of Helius discusses Solana's technical advantages, scalability solutions, and the future of decentralized physical infrastructure networks.

Solana's Emergence as a Payments Hub | Roundup

Explore Solana's growing prominence in crypto payments, featuring Visa's USDC settlement, Shopify integration, and the evolution of DeFi on the blockchain.

The State Of Solana In 2024 | Austin Federa

Explore the current state of Solana with Austin Federa, discussing economic security, meme coins, network growth, and the future of blockchain technology.

Token Extensions and Solana's Long-Term Strategy with Austin Federa

Austin Federa discusses Solana's innovative token extensions, mobile strategy, and vision for the future of blockchain technology and adoption.

Solana Legend on Next Generation Blockchains

Solana OG shares insights on blockchain evolution, DeFi innovations, and the future of Web3 gaming in this in-depth interview

Solana's Ultimate Vision | Anatoly Yakovenko

Solana co-founder Anatoly Yakovenko discusses Solana's unique design, scalability advantages, and vision for decentralized global markets in this in-depth podcast interview.

Breakpoint 2023: NFT Past & The Future

Max Zhuang, CEO of Sniper Labs, discusses the evolution of NFTs and Sniper's role in the growing market.

Solana Staking Rewards Calculator

Calculate your potential earnings when staking on the Solana network

Breakpoint 2023: Payments on Solana, The Digital Commerce Revolution

Exploring the potential of Solana for revolutionizing digital payments and commerce.

Breakpoint 2023: Star Atlas Session

A visionary presentation on Star Atlas's intersection of gaming and blockchain on the Solana platform.

xNFTs and Solana Phone ft. Armani Ferrante

Discover how xNFTs and the Solana Phone are revolutionizing Web3 mobile experiences with Coral founder Armani Ferrante.

BULLPEN ROUNDUP: What Happens Next?

Dive into the latest crypto trends with the Unlayered team as they discuss Solana's scaling issues, the rise of meme coins, and the potential for breakthrough social apps in the crypto space.

Breakpoint 2023: Creator Economy on Solana

Exploring the rising creator economy on Solana with a focus on on-chain monetization and relationships.

Breakpoint 2023: Gaming in Web3 Panel

Leaders in the Web3 gaming space discuss the challenges and opportunities within the industry.

Anatoly Yakovenko: A Deep Dive Into Solana 2.0

Anatoly Yakovenko discusses Solana's future, including Saga Chapter 2, fee market optimizations, validator profitability, and the network's end game