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Why Are Solana Transactions Dropping? | Mert Mumtaz, Dan Smith

By Lightspeed

Published on 2024-04-06

Explore Solana's network issues, dropped transactions, and potential solutions with experts Mert Mumtaz and Dan Smith in this insightful Lightspeed podcast episode.

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

Understanding Solana's Transaction Challenges

The Solana blockchain has been experiencing a significant issue with dropped transactions, creating frustration for users and developers alike. In a recent episode of the Lightspeed podcast, hosts Mert Mumtaz and Dan Smith delve into the reasons behind these challenges and explore potential solutions. As the Solana ecosystem continues to grow and evolve, addressing these network issues has become a top priority for the community.

The Difference Between Failed and Dropped Transactions

Before diving into the root causes of Solana's transaction issues, it's crucial to understand the distinction between failed and dropped transactions. Mert Mumtaz, an RPC provider and expert in the field, explains that failed transactions are actually less problematic from a user experience perspective. A failed transaction occurs due to application-level issues and provides feedback to the user. In contrast, dropped transactions are a result of network problems and offer no immediate feedback, creating a more frustrating experience for users.

Solana's Unique Transaction Processing Model

To comprehend why Solana faces these challenges, it's essential to understand its unique transaction processing model. Unlike Ethereum, which utilizes a mempool system, Solana employs a direct-to-validator approach. Transactions are sent directly to the block leader (validator) responsible for producing the next block. This system works well under normal conditions but can become overwhelmed during periods of high demand.

The Root of the Problem: Networking Stack Issues

Mert Mumtaz identifies the core issue as Solana's networking stack, which he describes as "not good." The current implementation struggles to handle the massive influx of transactions during peak periods, leading to dropped connections and lost transactions. This problem is exacerbated by the lack of a traditional mempool system, which would allow for better transaction prioritization and management.

QUIC Protocol and Its Limitations

Solana utilizes the QUIC protocol, developed by Google, to manage network connections and throttle excessive traffic. While this helps prevent validators from being overwhelmed, it can lead to unintended consequences. The current implementation may not always prioritize transactions effectively based on fees, resulting in higher-fee transactions being dropped in favor of lower-fee ones.

Stake-Weighted Quality of Service (QoS)

To address some of these issues, Solana has implemented a stake-weighted QoS system. This approach gives priority to connections from wallets or entities with staked SOL, theoretically allowing them to submit transactions more reliably. However, Mert notes that this system is not perfect and still has bugs that need to be addressed.

The Circular Nature of Solana's Challenges

Dan Smith raises an interesting point about the circular nature of Solana's transaction issues. He asks whether the root cause is an economic problem, where spam remains profitable, or if it's primarily a networking issue. Mert acknowledges the interconnected nature of these factors, suggesting that improvements in either area could lead to overall network enhancements.

The Role of Fees in Network Congestion

While increasing transaction fees might seem like an obvious solution to reduce network congestion, Mert cautions against oversimplifying the issue. He explains that the real question is whether the expected value of spamming the network outweighs the cost. In some cases, even significantly higher fees might not deter certain types of high-value transactions or arbitrage opportunities.

The Importance of Research and Communication

Mert emphasizes the need for more research and better communication within the Solana ecosystem. He argues that information currently confined to the codebase needs to be articulated and shared with the broader community. This would allow for more informed discussions and collaborative problem-solving efforts.

Gito's Impact on Transaction Processing

The conversation turns to Gito, a validator client now used by approximately 72% of Solana validators. Gito has implemented its own block engine, which has shown promising results in terms of transaction inclusion and latency. However, the hosts discuss whether widespread adoption of Gito's approach could simply shift the problem rather than solve it entirely.

The Complexity of Solana's Core Protocol

Dan and Mert reflect on the complexity of Solana's core protocol and the challenges of maintaining a high-performance blockchain. They note that only a small number of individuals fully understand the intricacies of Solana's networking stack, highlighting the need for more education and knowledge sharing within the community.

Potential Solutions and Upcoming Upgrades

The hosts discuss several potential solutions and upcoming upgrades that could address Solana's transaction issues. These include:

  1. Improvements to the networking stack
  2. The implementation of Firedancer, a new client with an alternative networking approach
  3. Upgrades to the scheduler for better transaction prioritization
  4. Potential changes to the fee mechanism

Mert emphasizes that fixing the networking stack is likely the most pressing issue, as it will provide clearer data on network behavior and allow for more informed decisions about economic incentives and fee structures.

The Ellipsis Labs Funding Round

Shifting gears, the conversation turns to recent developments in the Solana ecosystem. Ellipsis Labs, the team behind the Phoenix Protocol order book DEX, recently raised a $20 million Series A funding round led by Paradigm. The hosts discuss the significance of this investment and the potential impact on Solana's DeFi landscape.

The Launch of Ore: Bitcoin-like Mechanics on Solana

The podcast concludes with a discussion of Ore, a newly launched project on Solana that mimics certain aspects of Bitcoin's mechanics within a smart contract environment. While the hosts acknowledge some launch issues, they note the significant interest and interaction the project has generated, highlighting the ongoing experimentation and innovation within the Solana ecosystem.

The Future of Solana and Ongoing Development Efforts

Despite the current challenges, the hosts remain optimistic about Solana's future. They emphasize the ongoing development efforts and the commitment of various teams working to improve the network's performance and reliability. As Solana continues to evolve, addressing these core issues will be crucial for maintaining its position as a leading high-performance blockchain platform.

The Importance of User Experience

Throughout the discussion, both Mert and Dan stress the importance of user experience in driving adoption and growth of the Solana ecosystem. By focusing on resolving dropped transactions and improving overall network reliability, Solana can create a more seamless and enjoyable experience for both developers and end-users.

Collaboration and Community Efforts

The hosts highlight the collaborative nature of the Solana ecosystem, with various teams and projects working together to address common challenges. This spirit of cooperation and shared problem-solving is seen as a key strength of the Solana community and a driving force behind ongoing improvements.

The Role of Wallets in Improving Transaction Reliability

Mert suggests that wallet providers should be given priority access to the network, as they serve as the primary point of contact for most users. By ensuring that wallet transactions are processed more reliably, the overall user experience on Solana can be significantly improved.

Balancing Innovation and Stability

As Solana continues to push the boundaries of blockchain technology, the hosts discuss the importance of balancing innovation with stability. While experimentation and new features are essential for growth, ensuring a reliable and consistent user experience remains paramount.

The Ongoing Evolution of Blockchain Technology

The challenges faced by Solana are viewed in the broader context of the ongoing evolution of blockchain technology. The hosts acknowledge that as the industry matures, new problems and solutions will continue to emerge, driving further innovation and improvement.

Solana's Position in the Broader Crypto Ecosystem

Despite its current challenges, Solana remains a leading platform for decentralized applications and continues to attract significant developer interest. The hosts discuss how Solana's unique approach to scaling and performance sets it apart from other blockchain platforms.

The Importance of Transparent Communication

Throughout the episode, Mert and Dan emphasize the need for transparent communication about Solana's challenges and ongoing development efforts. By keeping the community informed and engaged, the Solana ecosystem can foster trust and collaboration in addressing these issues.

Looking Ahead: Solana's Roadmap

While specific timelines are difficult to predict, the hosts discuss Solana's roadmap and the various upgrades and improvements in the pipeline. They express optimism that with continued focus and development, many of the current challenges can be overcome.

The Role of Economic Incentives in Network Security

The conversation touches on the importance of properly aligned economic incentives in maintaining network security and performance. As Solana continues to refine its fee mechanism and validator rewards, finding the right balance will be crucial for long-term sustainability.

Lessons for Other Blockchain Platforms

The challenges faced by Solana offer valuable lessons for other blockchain platforms aiming to achieve high performance and scalability. The hosts discuss how the broader blockchain community can learn from Solana's experiences and apply these insights to their own development efforts.

The Impact of Network Issues on DeFi and NFT Markets

The podcast briefly touches on how Solana's network issues have affected various sectors of its ecosystem, particularly decentralized finance (DeFi) and non-fungible token (NFT) markets. Addressing these challenges is seen as crucial for maintaining Solana's competitive edge in these rapidly evolving spaces.

The Potential of Layer 2 Solutions on Solana

While Solana is designed as a high-performance Layer 1 blockchain, the hosts discuss the potential role of Layer 2 solutions in further enhancing scalability and performance. They explore how lessons from Ethereum's Layer 2 ecosystem might be applied to Solana in the future.

Educating Users and Developers

A recurring theme throughout the episode is the need for better education and resources for both users and developers in the Solana ecosystem. By improving understanding of the network's intricacies, the community can work together more effectively to address challenges and drive innovation.

The Role of Decentralization in Solana's Development

The hosts discuss the importance of maintaining decentralization as Solana continues to evolve. They explore how various upgrades and solutions can be implemented while preserving the network's commitment to decentralization and censorship resistance.

Comparing Solana to Other Blockchain Platforms

While the focus of the episode is on Solana's challenges, the hosts occasionally draw comparisons to other blockchain platforms, highlighting Solana's unique approach and potential advantages in terms of scalability and performance.

The Importance of Stress Testing and Simulation

As Solana works to address its networking and transaction processing issues, the hosts emphasize the importance of thorough stress testing and simulation. By anticipating potential problems before they occur in a live environment, the network can become more resilient and reliable.

Fostering Innovation Within the Solana Ecosystem

Despite the current challenges, the hosts remain excited about the potential for innovation within the Solana ecosystem. They discuss how addressing core infrastructure issues can create a more stable foundation for developers to build increasingly sophisticated and powerful applications.

The Role of Governance in Solana's Future

As the Solana ecosystem continues to grow and evolve, the hosts touch on the potential role of governance in shaping the network's future. They explore how community-driven decision-making processes might help address some of the challenges discussed throughout the episode.

In conclusion, while Solana faces significant challenges in terms of dropped transactions and network congestion, the Lightspeed podcast hosts remain optimistic about its future. By addressing core networking issues, refining economic incentives, and fostering collaboration within the ecosystem, Solana has the potential to overcome these obstacles and continue its growth as a leading blockchain platform.

Facts + Figures

  • Solana is experiencing a high rate of dropped transactions, which are more problematic for users than failed transactions.
  • Approximately 72% of Solana validators are running the Gito client.
  • Ellipsis Labs, creators of the Phoenix Protocol, raised a $20 million Series A funding round led by Paradigm.
  • Solana uses the QUIC protocol, developed by Google, to manage network connections and throttle excessive traffic.
  • Solana transactions expire within one minute if not included in a block.
  • The Ore project, which mimics certain aspects of Bitcoin's mechanics, has become the third most interacted with program on Solana within 24 hours of launch.
  • Only about 10 people in the world fully understand Solana's networking stack, according to Mert Mumtaz.
  • Solana does not use a traditional mempool system for transaction management.
  • The stake-weighted QoS system gives priority to connections from wallets or entities with staked SOL.
  • Gito's block engine has shown promising results, with 45% of transactions landing in the same slot and 90% landing within five slots (about two seconds of latency).
  • Solana's networking stack is being reworked, with patches coming in version 1.18.
  • Firedancer, a new Solana client, is being developed with an alternative networking stack.
  • Solana aims for continuous block building, which presents unique engineering challenges.
  • The Solana ecosystem is exploring potential changes to its fee mechanism to address network congestion issues.
  • Transparent communication and community collaboration are emphasized as key factors in addressing Solana's challenges.

Questions Answered

Why are transactions dropping on Solana?

Transactions are dropping on Solana primarily due to issues with the network's networking stack. The current implementation struggles to handle high volumes of transactions during peak periods, leading to dropped connections and lost transactions. This problem is exacerbated by Solana's unique direct-to-validator transaction processing model, which can become overwhelmed when demand outpaces the available supply of block space.

How does Solana's transaction processing differ from Ethereum's?

Solana's transaction processing differs from Ethereum's in that it doesn't use a traditional mempool system. Instead, transactions are sent directly to the block leader (validator) responsible for producing the next block. This approach allows for faster transaction processing under normal conditions but can lead to congestion and dropped transactions during periods of high demand. In contrast, Ethereum uses a mempool where transactions wait before being included in a block.

What is the QUIC protocol and how does it affect Solana?

The QUIC protocol is a networking protocol developed by Google that Solana uses to manage network connections and throttle excessive traffic. It helps prevent validators from being overwhelmed by shedding connections or rate-limiting users based on certain criteria. However, the current implementation may not always prioritize transactions effectively based on fees, which can lead to higher-fee transactions being dropped in favor of lower-fee ones.

What solutions are being proposed to address Solana's transaction issues?

Several solutions are being proposed to address Solana's transaction issues, including:

  1. Improvements to the networking stack
  2. Implementation of Firedancer, a new client with an alternative networking approach
  3. Upgrades to the scheduler for better transaction prioritization
  4. Potential changes to the fee mechanism
  5. Giving priority access to wallet providers for more reliable transaction processing

What is Gito and how does it impact Solana's performance?

Gito is a validator client used by approximately 72% of Solana validators. It has implemented its own block engine, which has shown promising results in terms of transaction inclusion and latency. Gito's approach allows for 45% of transactions to land in the same slot and 90% to land within five slots (about two seconds of latency). However, there are concerns that widespread adoption of Gito's approach could simply shift the problem rather than solve it entirely.

How does the stake-weighted QoS system work on Solana?

The stake-weighted Quality of Service (QoS) system on Solana gives priority to connections from wallets or entities with staked SOL. This approach theoretically allows these prioritized connections to submit transactions more reliably. However, the system is not perfect and still has bugs that need to be addressed. The goal is to provide a more consistent experience for users who have a vested interest in the network through their staked tokens.

What is the Ore project and why is it significant?

The Ore project is a newly launched initiative on Solana that mimics certain aspects of Bitcoin's mechanics within a smart contract environment. It aims to release one token called Ore per minute, targeting a total supply of 21 million tokens over 40 years. Despite some launch issues, Ore quickly became the third most interacted with program on Solana within 24 hours, highlighting the ongoing experimentation and innovation within the Solana ecosystem.

How is the Solana community addressing the need for education and research?

The Solana community is addressing the need for education and research by emphasizing transparent communication and collaboration. Experts like Mert Mumtaz stress the importance of articulating information currently confined to the codebase and sharing it with the broader community. This approach aims to foster more informed discussions and collaborative problem-solving efforts. Additionally, there are calls for more comprehensive documentation, tutorials, and resources to help both developers and users better understand the intricacies of the Solana network.

What role do economic incentives play in Solana's network issues?

Economic incentives play a crucial role in Solana's network issues, particularly concerning spam transactions. The key question is whether the expected value of spamming the network outweighs the cost of doing so. Simply increasing transaction fees may not be enough to deter certain types of high-value transactions or arbitrage opportunities. Finding the right balance of economic incentives is essential for maintaining network security and performance while discouraging malicious behavior.

How does Solana plan to balance innovation with network stability?

Solana aims to balance innovation with network stability by focusing on core infrastructure improvements while continuing to support experimentation and new features. The primary focus is on addressing fundamental issues like the networking stack and transaction processing to create a more stable foundation. This approach allows for ongoing innovation in the application layer while ensuring a more reliable and consistent user experience. The community emphasizes the importance of thorough testing and simulation to anticipate potential problems before implementing changes in the live environment.

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