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The State Of Solana In 2024 | Austin Federa

By Lightspeed

Published on 2024-06-07

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

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

The State of Solana in 2024: Insights from Austin Federa

In a recent episode of the Lightspeed podcast, Austin Federa, head of strategy at the Solana Foundation, shared his insights on the current state of Solana and the most exciting developments happening in the crypto space. This in-depth discussion covered a wide range of topics, from the progress of Firedancer to the debate on economic security and the rise of social tokens and meme coins.

Solana's Growth and Progress

The first half of 2024 has been unprecedented for Solana, with significant growth in user adoption, network volume, and overall market performance. Federa attributes much of this success to the dedication of builders who continued to work through the bear market of 2022 and 2023. Projects like Jito, Jupiter, and Margin Phi launched impressive products that showcased the unique capabilities of the Solana network.

Federa highlighted the importance of the social layer within the Solana ecosystem:

"The real thing is the social layer, the highly technical builder social layer has never been stronger on the network. And it's starting to, you know, over time, reflect the same powerhouse strength you see in Ethereum, which is why that network has been such a powerhouse and been able to endure so much over the last, you know, however many years is what, eight years since Ethereum launched."

The Solana Foundation's Role

To provide context for the discussion, Federa explained the role of the Solana Foundation and its relationship with other key organizations in the ecosystem. The Solana Foundation is a non-profit based in Switzerland, dedicated to the decentralization, advancement, adoption, and security of the Solana blockchain. Its primary functions include:

  1. Engineering coordination
  2. Managing the SIMD (Solana Improvement Proposal) process
  3. Grant distribution
  4. Running the Solana Foundation delegation program
  5. Maintaining key infrastructure like solana.com and the Explorer

Federa emphasized that the Foundation's role is not as a primary engineering organization but rather as a support structure for teams building on Solana.

Solana Labs and ANSA Technologies

In addition to the Solana Foundation, Federa discussed the roles of Solana Labs and ANSA Technologies. Solana Labs functions as a product studio, similar to Consensus in the Ethereum ecosystem. It has launched various products and technologies, including Solana Mobile and the original development work for Metaplex.

ANSA Technologies, a relatively new organization, comprises many engineers who previously worked on the core Solana Labs client. Their primary focus is building the Agave Validator client, which is a continuation of the Solana Labs codebase.

Firedancer: Revolutionizing Solana's Performance

One of the most exciting developments in the Solana ecosystem is the progress of Firedancer, a validator client being built by Jump Crypto. Federa recently interviewed Kevin Bowers, the lead developer of Firedancer, and shared some key insights from their conversation.

The most surprising revelation was that the networking stack, rather than the runtime or consensus mechanism, is currently the primary bottleneck for Solana's performance. Federa explained:

"The networking stack rewrite seems to be a significant portion of the performance increases that can be eked out without any changes really to the runtime where the consensus part of the existing client. And that surprised me. I actually didn't expect that to be the case."

This insight suggests that significant performance improvements can be achieved through optimizations to the networking layer alone, without requiring extensive changes to other components of the Solana architecture.

Solana's Roadmap and Future Development

When discussing Solana's roadmap, Federa emphasized the importance of flexibility and adaptability in blockchain development. He argued that rigid, long-term roadmaps can often be counterproductive, as they fail to account for unforeseen challenges and opportunities that arise during the development process.

Instead of a traditional roadmap, Solana focuses on setting targets, objectives, and paradigms for software engineering. This approach allows for a more flexible and responsive development process. Federa explained:

"By setting targets and setting objectives and setting sort of paradigms of how software engineering should be conducted, these things need to be permissionless, they need to be decentralized, right? All of these sorts of values we instill into it, you can actually have a much more free engineering process."

Token Extensions and Future Developments

Federa highlighted token extensions as a significant recent development on Solana. While launched in January, the full impact of token extensions is yet to be realized. He predicts that the adoption of token extensions will bring substantial benefits to the Solana community and network in the near future.

Additionally, Federa mentioned upcoming developments such as generalized account compression, which aims to make compression technology more composable and easier to use in various applications. This technology could help address issues related to rent costs on Solana.

Marketing in the Blockchain Space

The discussion touched on the evolving perception of Solana's marketing efforts. Federa acknowledged that the Solana Foundation's approach to marketing has not always been perfect, but he believes they are doing a better job than many other foundations in the space.

He emphasized the challenges of marketing a blockchain network, comparing it to marketing a country:

"The hard part about marketing blockchain is it's like trying to market like America, right? Like there's so many different things that happen in this country, that are we marketing Yosemite? Are we marketing the Statue of Liberty? Are we marketing tax-friendly areas for new business development?"

Federa argued that the best marketing for Solana comes from the projects built on the network, rather than from the foundation itself. He stressed the importance of removing barriers for builders and allowing the ecosystem to speak for itself.

Blockchain Speed and Latency

The podcast delved into the topic of blockchain speed and latency, particularly in relation to the recent debate between Anatoly Yakovenko and Justin Drake. Federa provided insights into how Solana approaches these issues and the potential solutions being developed.

He explained that while timing advantages can be a concern in blockchain networks, Solana's approach of having multiple concurrent block producers distributed around the world helps mitigate these issues. Federa stated:

"The way you address this though is you have leaders moving all around the world in multiple concurrent leaders. Right? And so the minute that you have that sort of system and these, you know, you can even build in geographic proximities to how the leader schedule is done at some point."

This approach, according to Federa, provides a more balanced and fair system for all participants, regardless of their geographic location.

Economic Security: Meme or Reality?

One of the most contentious topics in the blockchain space is the concept of economic security. Federa offered a nuanced perspective on this issue, acknowledging the value of economic security while also pointing out its limitations.

He argued that while economic security is important, it's often overemphasized at the expense of other crucial factors:

"95% of probably that might be 25% of Ethereum's security. The other 75% comes from having four to six different validator client implementations, for having formal verifications of specs, by having all this other technical work that's done on to make the network of Ethereum quite decentralized, quite global, with lots of different software implementations that you can possibly use."

Federa stressed the importance of considering other aspects of network security, such as decentralization, formal verification, and diverse client implementations, rather than focusing solely on the economic value staked in the network.

Issuance vs. Cost in Blockchain Economics

The discussion then turned to the topic of token issuance and its economic implications for blockchain networks. Federa provided a nuanced perspective on whether issuance should be considered a cost to the network.

He argued that the concept of cost in this context is not as straightforward as some might think:

"You know, in a perfect world where everyone is equally staked, like if 100% of a network is staked, you know, it is not a cost to issue additional tokens because everyone maintains their pro-rata ownership."

Federa emphasized the need to consider various factors when evaluating the economic impact of token issuance, including staking participation rates, MEV (Miner Extractable Value), and block building rewards. He also drew parallels to traditional financial concepts, such as the real cost of mortgages when accounting for inflation.

The Importance of Context in Blockchain Comparisons

Throughout the discussion, Federa stressed the importance of considering the context and stage of development when comparing different blockchain networks. He pointed out that Solana, being a younger network than Ethereum, is at a different point in its lifecycle:

"We're comparing a four-year-old chain today to a nine-year-old chain today. But what's so, so interesting is Solana has roughly a five and a half percent inflation rate today. And if you look at Ethereum, four years old, Ethereum was about the same number."

This perspective highlights the need for a more nuanced understanding of blockchain economics and development trajectories, rather than making direct comparisons without considering the broader context.

The Rise of Meme Coins and Social Tokens

The podcast also addressed the recent phenomenon of meme coins and social tokens, particularly those associated with celebrities launching coins on Solana. Federa offered a balanced view on this controversial topic.

While acknowledging that he personally doesn't trade or endorse these tokens, Federa argued that they represent a natural evolution of celebrity culture in the blockchain space:

"Everyone talks about how they want global adoption of blockchain technology. They want users. They want normies. These are all the words that get thrown around. And celebrity culture is a huge part of modern culture, right?"

He drew parallels between purchasing meme coins and buying celebrity-endorsed products in the traditional world, suggesting that these tokens are simply stripping economic systems down to their most basic form.

The Importance of Permissionless Systems

Federa emphasized the importance of maintaining permissionless and decentralized networks, even if it means allowing for the creation of products or tokens that some may find controversial:

"I don't think that means it should be banned. I don't think that means people should be forbidden from creating it. That is the same kind of like woke censorship that is taken over YouTube, has taken over old Twitter and all these different areas."

He argued that the power of blockchain lies in giving users financial control and sovereignty, and that attempting to control how people use these systems goes against the fundamental principles of the technology.

The Role of "Less Serious" Use Cases in Adoption

An interesting point raised by Federa was the historical precedent of less "serious" or even controversial use cases driving the adoption of new technologies:

"One of the really important things here to remember is a lot of people join the internet for pornography. Right. Right. A lot of people bought a VHS. The reason VHS won over Betamax is because the porn industry picked VHS."

He argued that these initial, perhaps less noble use cases, often pave the way for more transformative applications of the technology. Federa suggested that meme coins and social tokens could serve as an entry point for many users, potentially leading them to explore more sophisticated aspects of blockchain technology over time.

The Future of Solana: Underexplored Verticals

When asked about underexplored verticals on Solana, Federa highlighted the potential for on-chain content distribution and subscription models:

"I still think there's room to build something like Netflix on chain, podcast subscriptions on chain. Some form of content gated access that allows people to have either more pay as you go relationships or, you know, be able to have more subscription based relationships to content they would like to consume."

He believes that Solana's unique characteristics, particularly its payment capabilities, make it well-suited for these types of applications. Federa also expressed interest in seeing further development of decentralized social media platforms on Solana, despite the challenges faced by previous attempts in this space.

Collaboration in the Blockchain Space

Throughout the discussion, Federa emphasized the importance of collaboration and unity within the blockchain industry, particularly in the face of regulatory challenges:

"Blockchain is or at least was a few weeks ago under attack as a consensus opinion by a lot of governments and a lot of politicians in the world, and we're seeing that start to change. This is like not the time to be fighting each other about whose scaling roadmap is marginally better over a six to 18 month time horizon."

He argued that the blockchain community should focus on presenting a united front when dealing with regulatory issues, rather than engaging in infighting over technical details.

Conclusion: Solana's Bright Future

As the discussion concluded, it became clear that Solana is positioned for continued growth and innovation in the blockchain space. With ongoing developments like Firedancer, token extensions, and a thriving ecosystem of builders, Solana is addressing key challenges and pushing the boundaries of what's possible in blockchain technology.

Federa's insights highlighted the importance of flexibility, user adoption, and maintaining the core principles of decentralization and permissionlessness. As Solana continues to evolve, it will be exciting to see how these principles shape the future of the network and the broader blockchain industry.

The conversation with Austin Federa provided a comprehensive overview of Solana's current state and future prospects, offering valuable insights for both developers and users in the blockchain space. As the ecosystem continues to grow and mature, Solana appears well-positioned to play a significant role in the ongoing evolution of blockchain technology.

Facts + Figures

  • Solana has experienced unprecedented growth in the first half of 2024, with increased user adoption and network volume.
  • The Solana Foundation is a non-profit based in Switzerland, dedicated to the decentralization, advancement, adoption, and security of the Solana blockchain.
  • ANSA Technologies, a new organization comprising former Solana Labs engineers, is focused on building the Agave Validator client.
  • Firedancer, a validator client being built by Jump Crypto, is making significant progress in improving Solana's performance.
  • The networking stack, rather than the runtime or consensus mechanism, is currently the primary bottleneck for Solana's performance.
  • Token extensions, launched in January, are expected to bring substantial benefits to the Solana community and network in the near future.
  • Solana's approach to having multiple concurrent block producers distributed around the world helps mitigate timing advantage issues.
  • Economic security is estimated to account for about 25% of Ethereum's overall security, with the remaining 75% coming from other factors like diverse client implementations and formal verifications.
  • Solana currently has a roughly 5.5% inflation rate, similar to Ethereum's rate when it was four years old.
  • The Solana ecosystem is seeing a rise in meme coins and social tokens, particularly those associated with celebrities.
  • Federa suggested that on-chain content distribution and subscription models represent underexplored verticals on Solana with significant potential.

Questions Answered

What is the current state of Solana in 2024?

Solana has experienced unprecedented growth in the first half of 2024, with increased user adoption and network volume. The ecosystem has seen the launch of impressive projects like Jito, Jupiter, and Margin Phi, showcasing the unique capabilities of the Solana network. The social layer of highly technical builders has never been stronger, reflecting a similar strength to what is seen in the Ethereum ecosystem.

What is the role of the Solana Foundation?

The Solana Foundation is a non-profit organization based in Switzerland, dedicated to the decentralization, advancement, adoption, and security of the Solana blockchain. Its primary functions include engineering coordination, managing the SIMD process, grant distribution, running the Solana Foundation delegation program, and maintaining key infrastructure like solana.com and the Explorer. The Foundation serves as a support structure for teams building on Solana rather than as a primary engineering organization.

How is Firedancer improving Solana's performance?

Firedancer, a validator client being built by Jump Crypto, is making significant progress in improving Solana's performance. The most surprising revelation is that the networking stack, rather than the runtime or consensus mechanism, is currently the primary bottleneck for Solana's performance. Optimizations to the networking layer alone are expected to yield significant performance improvements without requiring extensive changes to other components of the Solana architecture.

What is Solana's approach to economic security?

While acknowledging the importance of economic security, Solana takes a more holistic approach to network security. Federa argues that economic security, often overemphasized, might account for only about 25% of a network's overall security. The remaining 75% comes from factors like diverse client implementations, formal verifications, and overall network decentralization. Solana focuses on these various aspects rather than solely on the economic value staked in the network.

How does Solana view the rise of meme coins and social tokens?

Solana takes a balanced view on the rise of meme coins and social tokens. While not personally endorsing these tokens, Federa argues that they represent a natural evolution of celebrity culture in the blockchain space and could serve as an entry point for many users into the broader blockchain ecosystem. He emphasizes the importance of maintaining permissionless and decentralized networks, even if it means allowing for the creation of products or tokens that some may find controversial.

What are some underexplored verticals on Solana?

Federa highlighted on-chain content distribution and subscription models as under-explored verticals with significant potential on Solana. He suggested that there's room to build services similar to Netflix or podcast subscriptions on-chain, leveraging Solana's unique characteristics, particularly its payment capabilities. Additionally, he expressed interest in seeing further development of decentralized social media platforms on Solana, despite the challenges faced by previous attempts in this space.

How does Solana compare to Ethereum in terms of development and economics?

When comparing Solana to Ethereum, it's important to consider the context and stage of development. Solana, being a younger network, is at a different point in its lifecycle compared to Ethereum. Interestingly, Solana's current inflation rate of roughly 5.5% is similar to Ethereum's rate when it was four years old. This highlights the need for a nuanced understanding of blockchain economics and development trajectories rather than making direct comparisons without considering the broader context.

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