Introduction to Blockchain Basics

Blockchain technology has revolutionized the way we think about decentralized systems and digital value transfer. However, many simplistic explanations of blockchains fail to capture the nuanced tradeoffs involved in their design and implementation. In this deep-dive discussion, former Solana core engineer Kevin shares his insights on the fundamental components of blockchains and how different ecosystems approach scaling challenges.

Kevin argues that the commonly cited "blockchain trilemma" of security, decentralization, and scalability is an oversimplification that hinders understanding of what blockchains could be. While it provides a useful abstraction, applying it uniformly to every blockchain construction ignores the complex engineering tradeoffs involved. As Kevin notes, "When you're a practicing engineer, you realize everything is just a series of trade offs."

The Core Components of Blockchains

At their core, blockchains can be thought of as distributed databases composed of many independent servers (nodes) running instructions to maintain a shared ledger. Kevin breaks down blockchains into three main components:

1. Data availability
2. Consensus
3. Execution

Understanding how different blockchain designs approach each of these components is key to evaluating their tradeoffs and potential use cases.

Data Availability: The Foundation of Blockchain Performance

Data availability refers to how quickly and reliably nodes can access the data needed to verify the blockchain state. As Kevin explains, "If I ask the network for this data, what's the guarantee I'm going to get it back and how fast am I going to get it back?"

This seemingly simple requirement becomes a major bottleneck for high-performance chains. Solana, for instance, has innovated significantly in this area with its Turbine block propagation protocol. By optimizing how quickly new blocks can be distributed to thousands of nodes, Solana enables its rapid 400 millisecond block times.

However, this comes with tradeoffs. Solana nodes only store about 2.5 days worth of historical data on-chain, relying on external solutions like Filecoin for longer-term storage. As Kevin notes, "Solana nodes only store like an epoch in the node. So that's like an epoch is like two and a half days on Solana."

This highlights a key design decision faced by all blockchain ecosystems - how much historical data should individual nodes be required to store? Bitcoin takes the maximalist approach of storing the entire chain history, while Ethereum and Solana make different tradeoffs to enable higher throughput.

Consensus: Agreeing on the State of the World

Consensus mechanisms are responsible for ensuring all nodes reach agreement on the current state of the blockchain. Kevin explains that consensus is about "guaranteeing consistency" - ensuring that querying any node will return the same information about the blockchain state.

Different consensus approaches make tradeoffs between speed, security, and decentralization. Proof-of-Work chains like Bitcoin use probabilistic finality, where the chance of a transaction being reversed becomes vanishingly small over time. In contrast, Proof-of-Stake chains can provide deterministic finality, where blocks are guaranteed to be final after a certain point.

Solana takes a hybrid approach with its Proof-of-History mechanism. As Kevin describes it, "Solana is very opinionated in the fact that like, you know, every full node is synced at the speed of light around, you know, the world." This enables Solana's rapid block times, but comes with tradeoffs in terms of node hardware requirements.

Execution: The Blockchain Operating System

The execution layer determines how smart contracts and transactions are processed on the blockchain. Kevin compares this to the operating system on a computer - it defines the environment in which blockchain applications run.

Ethereum popularized the Ethereum Virtual Machine (EVM) as its execution environment. This has become a de facto standard, with many "EVM-compatible" chains adopting it for easier developer onboarding. However, Kevin argues the EVM is showing its age: "It's clear that that EVM is not the best execution layer, right? It has product market fit. So like, that's another argument, like in its favor, but it's clear it's not the best execution layer."

Solana takes a different approach with its Solana Virtual Machine (SVM). By separating program logic from state data, the SVM enables greater parallelization of transaction execution. This contributes significantly to Solana's high throughput, but comes with tradeoffs in terms of developer experience and composability.

Modular vs Monolithic Blockchain Architectures

A key debate in the blockchain space is between modular and monolithic chain designs. Ethereum is embracing a modular approach, with Layer 2 rollups handling execution while the base layer focuses on security and data availability. In contrast, Solana maintains a monolithic design that tightly integrates all blockchain functions.

Kevin provides an insightful analogy to the evolution of computer hardware:

"The modular thesis looks at it as kind of the way like current cloud infrastructure is going to evolve and the monolithic view kind of looks at it as the way like current hardware infrastructure evolved."

He notes that historically, tightly integrated systems have often outperformed modular designs in terms of raw performance. The Apple M1 chip is a prime example, delivering massive performance gains by integrating components that were previously separate.

However, modular designs can offer greater flexibility and easier iteration. Kevin observes that projects like Celestia and Eigen Layer are betting they can be "best-in-class" for specific blockchain components like data availability.

The Case for Monolithic Chains like Solana

While modular blockchain designs are gaining traction, Kevin makes a compelling case for the continued relevance of monolithic architectures like Solana:

1. Performance through co-location: Tightly integrating blockchain components allows for optimizations that are difficult in modular systems.

2. Cultural cohesion: "It's a lot easier to have a shared vision of an ecosystem and a culture and composability when everything's on one chain."

3. Rapid iteration: Monolithic chains can more quickly implement optimizations across the full blockchain stack.

4. Simplified mental model: Developers and users only need to think about one chain, rather than a complex ecosystem of Layer 2s.

Kevin argues that Solana's design choices, while sometimes criticized, are often addressing scaling challenges that all high-performance chains will eventually face. For instance, Solana's high number of consensus votes is a direct result of optimizing for thousands of nodes to reach agreement within 400 millisecond block times.

The Future of Blockchain Scaling

Looking ahead, Kevin believes the winning blockchain architectures will be those that enable the next wave of killer applications. While Ethereum currently has an advantage in terms of developer mindshare, he notes that a single breakout app on Solana or another chain could rapidly shift the balance.

Ultimately, Kevin advocates for a more nuanced understanding of blockchain tradeoffs:

"I think it's just like really important as people think about these systems to not get sucked into these like tribal, this is best, that is best, right? Like if this industry as a whole wants to scale, like there needs to be conversations about all these things in order to like enable new use cases."

As the blockchain space continues to evolve, it's clear that there's room for multiple approaches. Monolithic chains like Solana are pushing the boundaries of on-chain performance, while modular ecosystems offer flexibility and specialization. By understanding the tradeoffs involved, we can better appreciate the innovations happening across the entire blockchain landscape.

Solana's Unique Approach to Scalability

Solana's architecture makes several unique design choices that set it apart from other blockchain ecosystems. One of the most notable is its approach to parallelization of transaction execution. By separating program logic from state data, Solana enables much greater parallelism than traditional blockchain designs.

As Kevin explains: "Separating state and data like allows you to essentially like parallelize the execution because you can do this like upfront analysis of like what data are you touching, right? What state are you touching? And if it's the same, then we'll move on in serial and if it's not, then we can run in parallel."

This parallelization is a key factor in Solana's high throughput. While other chains are exploring ways to parallelize execution, Solana's design bakes it in at a fundamental level. This allows Solana to take full advantage of modern multi-core processors, with each core potentially running a separate instance of the Solana VM.

Solana's Proof of History: A Novel Consensus Approach

Another key innovation in Solana's design is its Proof of History mechanism. Kevin describes this as "proof of work with time," noting that it allows Solana to decouple the ordering of transactions from the consensus process of agreeing on their validity.

This separation allows Solana to achieve its rapid 400 millisecond block times while still maintaining strong security guarantees. As Kevin notes, "Solana is very opinionated in the fact that like, you know, every full node is synced at the speed of light around, you know, the world."

While this approach has clear benefits for performance, it does come with tradeoffs. The rapid block times and high throughput put significant demands on validator hardware, which has led to criticisms about centralization risks. However, Kevin argues that Solana's design actually enables greater decentralization at scale by allowing the network to support thousands of nodes.

The Role of Votes in Solana's Consensus

One aspect of Solana that often draws criticism is the high number of consensus votes included in each block. However, Kevin provides valuable context on why this design choice is actually crucial for Solana's scalability:

"Solana TPS isn't just a question of like, how many try? Yeah, maybe it's only 400 or 500 actual transactions. All that other headroom is like what enables there to be 2000 nodes on the network sinking at the speed of light around the growth, right?"

By including votes in the main block propagation mechanism, Solana ensures that its consensus can scale to thousands of nodes while maintaining rapid block times. This is a challenge that any high-throughput blockchain will eventually need to solve, and Solana's approach offers valuable insights for the entire ecosystem.

Compressed NFTs: A Solana Innovation

One area where Solana's unique architecture enables novel use cases is in the realm of compressed NFTs. By separating state from data, Solana allows for much more efficient storage and manipulation of NFT metadata.

As Kevin notes, "There's like a very, like, it's hard to do compressed NFTs when state and data are together. It's not an unsolvable problem, though." This innovation has the potential to dramatically reduce the cost and increase the scalability of NFT projects on Solana.

The Challenge of Cross-Chain Compatibility

While Solana's unique design enables impressive performance, it does create challenges for cross-chain compatibility. Unlike EVM-compatible chains that can often run Ethereum smart contracts with minimal modifications, Solana's SVM requires a more significant rewrite.

Kevin acknowledges this tradeoff: "SVM takes like, it's a completely different computer system." However, he argues that this different paradigm also enables new possibilities that are difficult to achieve in the EVM model.

Solana's Future Roadmap

Looking ahead, Solana has several key improvements in the pipeline that promise to further enhance its capabilities:

1. Program Runtime v2: This upgrade will bring move VM-like capabilities to Solana, potentially improving developer experience and enabling new use cases.

2. Asynchronous Block Production: Similar to Ethereum's proposed block builder separation, this could further optimize Solana's performance.

3. Fee Market Improvements: Solana is actively working on refining its fee model to ensure long-term sustainability while maintaining low transaction costs.

These developments showcase Solana's commitment to continuous innovation and improvement. As Kevin notes, "Solana is working on actually implementing like an automated protocol to do this to say, hey, validators, you all stopped here. What is your view of the world? Let's all sink on that and then restart from there."

The Importance of Blockchain Diversity

While much of the discussion focused on Solana's unique attributes, Kevin emphasized the importance of diversity in the blockchain ecosystem. Different approaches to blockchain design enable a wider range of use cases and drive innovation across the entire space.

As Kevin concludes: "If this industry as a whole wants to scale, like there needs to be conversations about all these things in order to like enable new use cases, like, you know, especially with like AI and the advent of all these things, if we want these like new use cases to proliferate, then we can't be kind of myopic about our views of blockchains."

This perspective highlights the value of projects like Solana that are willing to challenge conventional wisdom and explore new approaches to blockchain scalability. By pushing the boundaries of what's possible on-chain, Solana is helping to expand the horizons of the entire blockchain ecosystem.

Facts + Figures

• Solana's block time is 400 milliseconds, significantly faster than many other blockchains
• Solana nodes typically store only about 2.5 days worth of historical data on-chain
• Solana is moving towards storing its entire historical state on Filecoin for long-term accessibility
• Solana's actual transaction throughput is around 400-500 TPS, with additional capacity used for consensus votes
• Solana's architecture enables it to support up to 2000 nodes while maintaining rapid consensus
• Ethereum is transitioning to a modular architecture with Layer 2 rollups handling execution
• The EVM (Ethereum Virtual Machine) has become a de facto standard, with many "EVM-compatible" chains adopting it
• Solana's SVM (Solana Virtual Machine) takes a different approach, separating program logic from state data
• Solana's Proof of History mechanism is described as "proof of work with time"
• Solana is working on implementing Program Runtime v2, which will bring move VM-like capabilities to the platform
• Asynchronous Block Production is another key improvement on Solana's roadmap
• Solana is actively working on refining its fee model to ensure long-term sustainability

Questions Answered

What are the three main components of a blockchain?

The three main components of a blockchain are data availability, consensus, and execution. Data availability refers to how quickly and reliably nodes can access blockchain data. Consensus is the mechanism by which nodes agree on the current state of the blockchain. Execution determines how smart contracts and transactions are processed on the chain.

How does Solana's architecture differ from Ethereum's?

Solana takes a monolithic approach, tightly integrating all blockchain functions, while Ethereum is moving towards a modular design with Layer 2 rollups. Solana's architecture separates program logic from state data, enabling greater parallelization of transaction execution. It also uses a unique Proof of History mechanism for consensus, allowing for extremely fast block times of 400 milliseconds.

What is the "blockchain trilemma" and why is it criticized?

The blockchain trilemma posits that blockchains must trade off between security, decentralization, and scalability. It's criticized for being an oversimplification that doesn't capture the nuanced engineering tradeoffs in blockchain design. While it provides a useful abstraction, applying it uniformly to every blockchain ignores the complex factors involved in real-world implementations.

How does Solana handle historical data storage?

Solana nodes typically store only about 2.5 days worth of historical data on-chain, which is referred to as an "epoch". For longer-term storage, Solana is moving towards storing its entire historical state on Filecoin. This approach allows Solana to maintain high performance while still ensuring long-term data availability.

What is the significance of Solana's high number of consensus votes?

While often criticized, Solana's high number of consensus votes is crucial for its scalability. By including votes in the main block propagation mechanism, Solana ensures that its consensus can scale to thousands of nodes while maintaining rapid block times. This design choice enables Solana to support up to 2000 nodes while syncing "at the speed of light" around the world.

How does Solana's approach to NFTs differ from other chains?

Solana's architecture, which separates state from data, enables more efficient storage and manipulation of NFT metadata. This has led to innovations like compressed NFTs, which can dramatically reduce the cost and increase the scalability of NFT projects on Solana. While this approach is more challenging to implement on chains where state and data are tightly coupled, it offers significant advantages for large-scale NFT applications.

What upcoming improvements are planned for Solana?

Key improvements on Solana's roadmap include Program Runtime v2, which will bring move VM-like capabilities to the platform, potentially improving developer experience and enabling new use cases. Asynchronous Block Production is another planned upgrade, similar to Ethereum's proposed block builder separation. Solana is also actively working on refining its fee model to ensure long-term sustainability while maintaining low transaction costs.