A Deep Dive into Solana

hi and welcome to another defiant special deep deep deep deep dive and today we're talking about solana the high speed high throughput proof of stake chain that has been on an inexorable climb up the misleading leaderboard that is market cap ranking and if you want to know why it's baffling just look where doge is so what is solana all about why should we be taking notice of it and why do so many people seem to hate alternative layer ones so much all that coming up and zagging brother zig this is the defiant we begin in the fashion that has become our trademark by concealing the floor to our sponsors without whom the world will be less sponsored and we start with balancer who are up to some pretty funky stuff to help ease the pain of high gas costs on ethereum trade as much as you like and recoup most of the gas costs damn straight and in their new ball for gas campaign traders are receiving six figures worth of ball tokens every week and with version two just around the corner balancer is becoming a one-stop shop for d5 liquidity version two brings stable pools and weighted pools tightly integrated under a single protocol with flash loans lending via asset managers and much much more check it out at balancer dot finance now we move to other which i keep calling other but it's arbor fun fact the name is actually taken from the finnish word for ghost and it's a decentralized open source and non-custodial liquidity protocol on ethereum depositors earn interest by providing liquidity to landing pools while borrowers can obtain loans by tapping into these pools with variable and stable interest rate options deposit into other protocol and receive a tokens which accrue interest every second right in your wallet seriously you can actually watch your balance going up every single second swap any of your deposited assets at any time to get the best yields on the market for the developers out there ava features access to d5 building blocks like flash loans and credit delegation other protocol liquidity pools are now available on ethereum and sidechain polygon to begin our journey we have to journey back to june 2018 when an aggressive layer one scaling solution launched what was really an all-out assault on well pretty much everybody it proclaimed itself the east killer it raised four billion dollars over the course of a year-long ico of which 24 million dollars went straight into the pockets of the sec i am of course talking about eos now whether you consider eos a success or a failure and given the amount they raised how can we consider it anything other than a colossal cluster what was that oh i can't have an opinion about that okay sorry the bureau of objective journalism is keeping close tabs on me now and um so yes eos didn't quite meet expectations somehow though this colossal fund raised signaled to the rest of the market that the east killer narrative made sense and what followed was a seemingly never-ending procession of like-minded killers all of which made the same assumption given slow transaction speeds and high costs developers as rational actors would naturally defect to whichever platform offered the best conditions in which to build an assumption which has been proven to be completely incorrect not only that it has served to wind up ethereum developers no end now it used to be that there were bitcoin maximalists and coiners but now we also have eth maximalists who treat competing layer ones with the same deep rooted disdain as their bitcoin counterparts and maybe they have good reason to because for the most part the so-called eth killers have fared less well than the hype around them might have led you to expect i should know i used to work for one now in their q1 report outlier ventures noted the decline in developer activity on tron eos komodo and kutum although the last two i don't recall ever having been called eath killers but hey you know what do i know now they also identified the developers were now actively choosing to pour their time into d5 protocols built on ethereum instead or into multi-chain beasts like polkadot so yeah it's all defy's fault now that same report gave but two very short mentions to solana but mike novogratz of all people was recently moved to call it a good horse to ride giddy up mike so what is solana and what are they doing right well to help me get to the heart of the matter i spoke to raj gokul solana's coo and threw him some deliberately maxi style questions unfortunately he wasn't able to record any voice messages for me because well he's just too damn busy but i will pepper his responses throughout as they're refreshingly honest and free from marketing speak so let's start with what solana actually is so solana is a proof of state blockchain whose big ambition was to configure a network of decentralized nodes so immaculately that they would match the performance of a single node now there are a bunch of powerful components to their system like proof of history tower bft and gulfstream their mempool-less transaction forwarding protocol way too much to go into here but the tower consensus mechanism basically leverages proof of history as a global source of time before consensus is achieved and this massively reduces network latency proof of history uses a recursive verifiable delay function to hash incoming events and transactions this also makes it extremely fast now it's a bit 2017 to throw tps numbers around but 60 000 is the one normally most often quoted in the bump about solana and don't you just love the word bumpf eat 2.0 is designed to leverage the parallel processing of shards and i was fortunate to work at harmony and see firsthand how sharded systems function now while i was there the team managed to lower the block time from 10 seconds to two seconds which is fast but it is telling that celina measured their block time not in seconds but in milliseconds now there are a few problems inherent with shards not least of which is ensuring that they can all communicate with each other that they can stay in sync now to avoid this core developer activity tends to cluster on the same shard leaving the others vulnerable to being taken over and that composability we all love in d5 becomes immeasurably more difficult once sharding is introduced but that is the way east 2 is headed so obviously many bright minds have started attacking the problem some within ethereum and many more externally attempting to deliver the architecture of eth 2.0 but better and faster hoping that will be enough to attract developers whose firepower is essential to any emerging young chain others however decided to forge a different path building the trade-offs that made the most sense to them cosmos polkadot solana for instance now being evm compatible was always held as a crucial usp for their ones but turns out maybe it wasn't that important after all or maybe the only team that could actually pull it off were the ones with their own network and user base ready to come and play finance but hey look if you really want to make this easy it's this celina is a smart contract platform that's designed to be orders of magnitude faster and cheaper than ethereum and that's it and is it well yes it is but that's really just the start of the journey my focus has been on the d5 ecosystem which is being rapidly built out on solana but there has been an impressive eruption of investment projects porting over to solana soul starter has been the talk of the town thanks to its promise of fairer ideos and token launches and then we have the likes of star atlas which promises a rich game metaverse complete with nfts and in-game economy that can be translated into real-world income and to be honest they're new meta posters do look pretty cool but let's zero in on the d5 system because this is the defined after all now to begin with what you need for defy is stable coins preferably ones that are well supported and recognizable both usdc and usdt exist natively on solana now which is quite a rarity and given how rapidly visa is rolling out support for usdc as a settlement option for blockchain this is an important stable to have running on the network they've also built a cross-chain bridge to enable the transit of assets from ethereum it's called the wormhole and this is more complicated than it might be on other platforms that are evm compatible but it should be becoming clearer by the day that a multi-chain future is coming our way fast so in the future expect ren phantom and terror and more on that last one in a bit now look every crypto project or every successful crypto project needs a good front man someone to be the brand storyteller in the beating heart the last one playing the violin as the ship goes down think vitalik think charles h bomb hoskinson or dan larimer oh come on who wrote this dan larimer seriously now this hero of heroes normally comes from within but over the last year a young man with fabulous hair and apparently even more fabulous bank account has established himself as the unofficial poster child for solana i am of course talking about sbf sam bagman sam batman freak anyone sam bankman batman sam manages around many billions and billions and billions worth of assets through alameda research and he became a folk hero to the sushi swap community when he steered the project through the potentially calamitous chef nomi situation oh sam sam is the ceo of the ftx exchange and out of these two entities has emerged serum you have to say it in a certain way for it to really land serum which is the world's first decentralized derivatives exchange which also features an amm in the shape of surum swap and surum is where things get interesting now as you would expect given the rise of d5 there are actually a bunch of uniswap style amms built on solana like bonfire radium and orca there's one crucial difference between the ones you find here and the ones you find on ethereum right serum serum uses a clob that's right a club what is a clob well it's a central limit order book much like you find on a centralized exchange but unlike those centralized exchanges any project in the solana ecosystem can access the club and plug in their liquidity as well as accessing the monster liquidity provided by alameda and legendary market makers jump trading this is exactly what radium did so successfully in fact the serum swap has now been deprecated allowing users to move to the focus competitor in radium as spf himself wrote radium protocol outbuilt and out competed serum swap and the ecosystem wins turn well done radium now this is actually also a win for serum since radium is driving its volume through the srm order books now radium also recently launched incentivized fusion pools which are joint projects between radium and serum ecosystem partners paying out dual yield in both the platform's native token and the other asset in a given fusion pool this provides honest farmers with a way to increase their exposure to two solana tokens at the same time now it seems to be a recurring theme of the solana defy ecosystem projects complementing not competing very wholesome the thing is all the recent headlines around solana seem to be fixated on sbf remember that quote from mike novogratz betting on the ecosystems of sbf and dokuan has been a great investing strategy and i was curious how the solana team themselves felt about this last year he was the loudest most credible builder who shouted from the mountaintops about solana to give it the awareness it deserves because he seems to care about the space progressing and using next-gen infrastructure ultimately every successful network needs many owners contributors and more importantly champions network champions can help evolve the ecosystem in ways that individual builders can't joe lubin and mike novogratz were pivotal in being champions in their own way sbf is one such awesome champion for solana in an ever growing ecosystem things move quickly there are 18 000 developers in the discord and 3 plus million followers across other channels the community is already much bigger than sbf at this point by nature it will only increasingly diversify from sbf we are grateful for sbf's support in the early days and has helped in producing serum which will be a flagship salon adapt for years to come but in the long run serum will be one of many globally distributed projects on the solana network do you remember your first d5 transaction after juggling five or more tabs on your browser you gazed at that etherscan confirmation feeling like you just contributed to the future of finance except now you kind of just got a little bit lost in a world of gas prices vaults pulls hard forks degenerates and sushi chefs and all that malarkey fortunately xerion has built the dream tool for managing your portfolio track all of your token balances across wallets and chains access every kind of defy asset including indexes pools and yield strategies and traded the cheapest rates with no extra fees and that is because xerion sources liquidity from every single decentralized exchange like unisop 0x and one inch no sign up required no fees and a blissfully easy ui simply connect your wallet at app.zirion.io and that does it for the sponsors so i mentioned tara earlier and if you follow the channel for a while you know that we've done a fair few videos on their d5 ecosystem of late mainly because it's so heavily focused on d5 and they're already connected with solano now the plan is to introduce seoul's staking rewards as fuel in anchor's money markets terra stablecoin ust is already live on solana and it is clear that there's huge admiration between the projects although the relative incompatibility of the two chains has raised some problems doe has been an ally and fierce advocate for solana and unfortunately all of his big ambitious ideas have been blocked by wormhole being incompatible with terra this will change soon now they actually announced a low latency bridge between the projects a year ago now but if they can get this working it opens up a hugely impressive defy ecosystem for solana projects and if terror well then who else this year has clearly proven that we are heading for a multi-chain future some users are willing to trade off security for better ux eg flow bsc some users will always be anchored to maximum security how ethereum there are different flavors of blockchain based environments being created for all types of users and bridges being built to connect all of these ecosystems in our opinion it now seems infeasible to expect that everyone will consolidate to one network one of the biggest sticks in the arsenal of any maximalist is decentralization it is the stick that must regularly be used to beat competing l1 into submission the truth is it takes quite a long time to become decentralized and it is something of a sliding scale you aren't just decentralized or not decentralized you're more decentralized but we can do a kind of very rough comparison of various chains here by looking at how many nodes there are in the network so the first place to look when thinking about no distribution is of course bitcoin and we go to bitnotes.io and here we find 9760 nodes which is a lot and if we look at the live map you can see there's a huge concentration in north america and in europe but not some not so much towards china a little bit on australia and it's kind of surprising because in my mind i feel like there'll be more nodes in china but i suspect what's going on here is there's just a lot of mining power in china but not so many nodes germany 1784 them germans love that bitcoin so that is quite impressive but obviously bitcoin has been around a long time now so you'd expect that a successful chain would have been able to decentralize itself to a considerable degree let's look at ether or ethereum as they like to call the kids like to call it ethereum so if we go to ethernodes we can see that there are in total 3958 clients here and we look at the countries again it's quite heavily concentrated in the u.s germany and you look at the map europe almost nothing in africa south america asia so even if we think about there being lots of nodes the node power is still heavily concentrated in specific territories around the world if we really want a decentralized network that's global you kind of want more of a spread than that and i'm sure it will come but this idea of decentralization and how things are spread out sometimes looks a little different when you look at it geographically like this next i'm going to look at all right let's look at algorand so algorand have two different types of nodes they have participation nodes and relay nodes the relay nodes are probably the most important one and if we look at their faqs where is it it's somewhere down here how many relay nodes are there as of january 2021 there is just over 100 relay nodes and who's running those relay nodes al grand inc algorithm foundation and early backers including universities and commercial entities those who are running the relay nodes does that sound decentralized not really probably means that the chain is quite fast and performant but decentralized yeah okay so what about hashgraph hashgraph loves to talk about how they're great for enterprise blockchain on the 7th of january 2021 they released a press uh piece saying very excited to announce today that hedera has expanded its network from just hold your excitement here 14 nodes two wait for it nodes 16. they added two new nodes with the inclusion of avery dennison and dentons into its most recent mainnet update um okay uh do we think that's decentralized no well here is a list of the nodes and um as i look at it now there's 17 of them and two of them have a partial outage okay okay it can happen now what about harmony so if we look at the block explorer and harmony we see that there's a two second block latency um i remember when that was ten seconds node count a thousand shard count four and it's the no cam we're interested in so a thousand sounds very impressive right if you think that ethereum has you know four thousand or so harmony pumping in at a thousand nodes sounds impressive but something you do need to know here which is the vast majority of those nodes are in fact not run by the community they're not run by external validators they're in fact internal and the picture gets a little a little muddier if you go to the validator dashboard and you look at how many validators there actually are go down the bottom ah it's 105. that's still quite a lot and many of these validators are taking up more than one slot uh but still that's no that's not that decentralized is it sorry harmony uh now what about elrond l1 is pretty interesting lryon makes lots of big claims about lots of different things you can see on their validator page a lot of it is concentrated in europe they are a romanian based project so that's what you would expect and there are nodes dotted around all over the place what we're interested in here is how many validators they have because it looks like a very impressive number if you thought harmony was impressive this is even more impressive they have 3 200 active validators 800 on each shard and that is that's deeply impressive is it not but is it but is it because the thing is if you scroll down these all look legit right if you scroll down suddenly from 73 onwards something happens they all seem to have the same logo oh wait what's this it's the lron logo what do you mean elrond is running all of these validators yes i'm afraid that's exactly what's going on here and one can only assume that the aws costs of running all those nodes are going to be substantial so as impressive as it looks it's all fluff i'm afraid that's not to diminish the achievement of getting even 100 validates which is bloody hard by the way to keep their uptime around 100 but yeah the numbers don't tell the whole picture so now what about solano so we go to solana beach which is the best block explorer i could find the best stats page i could find for solana again we can see on the map heavy concentration in the united states europe uh germany just seems to be a hot boat for blockchain and then over here in um east asia nothing particularly unexpected there how many validators do they have 601 601 validators now in the context of what we've just seen 601 should seem pretty impressive and it is but do we believe it do we believe that these are all external validators um as i understand from having been part of harmony there is it's important to get your decentralized network up and running by running your own nodes initially but maybe i'm wrong here but as i scroll down and go through the list it does appear to me that the vast majority of these nodes are in fact external the solana is doing what these other projects are not doing and it's it's encouraging and managing to succeed in persuading external validators to run software to run nodes and running a node is not easy it requires quite a lot of effort on the part of the validator to do so running software updates and maintaining up time it's not just a plug and play and you know forget about it so yeah like i said go to a project's website and it will tell you it'll give you some numbers but they don't necessarily paint the whole picture in solana's case i think it definitely adds up more favorably than any of the other ones we've looked at apart from ethereum and bitcoin so yeah something to think about so it turns out solano stacks up pretty well for a network that's only a year old a sixth of the nodes of ethereum with three and a half percent of the market cap and when i pressed raj on this he became understandably prickly the network is a year old at genesis it was around 40 nodes by january 2021 it was 373 it's 600 now with test net at 1k the test net validators should onboard to main it and get the mainnet to 1k within a month or two the rate of growth is more valuable than the standalone number today it's growing from scratch and for instance larry cermak said recently on twitter he thinks 100k nodes in three years is feasible he had to stretch that number to 500k before he was willing to take a bet with me on it one of blockchain's great selling points has always been censorship resistance and that's why it's so important that the network be as distributed as possible bellagi coined the term nakamoto coefficient last year as a way to quantify the decentralization of a blockchain in his words it's the number of entities you need to compromise at least one essential subsystem the higher the number the better if you only need to control one entity within a system to compromise an essential part of it then that's obviously not very secure now vitalik's last tweet on the subject which was a few months ago suggested ethereum had risen from a nakamoto coefficient of 25 to 34. so where does solana sit last year solana's was as low as three to four with solana run nodes in the super minority now there are no solana run nodes in the super minority virtually all nodes are independently run and the nakamoto coefficient is 15. it's trending upward and there are projects like stake pools rolling out to flatten the distribution and get the nc up so what about this evm compatibility issues now one of the big decisions solana took was not to be evm compatible out of the gate while many of their competitors made this a core promise i guess ostensibly to make it easier for solidity developers to join the party and as a result solana's architecture should be much better optimized to meet the needs of their designed system but it does mean developers have to do a bit more work to learn the necessary skills to build there but this seems to be having an unexpected benefit in filtering out fair weather developers in other words filtering out the slightly less good ones not only that evm compatibility is in fact already being built by the community there are at least two community-driven projects actively in motion an evm roll-up on solana and a solidity transpiler that compiles to bytecode it's inevitable it just wasn't prioritized early on by the community as far as holding solana's adoption back maybe in raw numbers but we've found that the devs willing to take two weeks to learn rust and build from scratch have been very high quality that's very important in the early days and long term we expect that web 2 languages like rust will actually end up being bridges for traditional developers to get into blockchain development so where does that leave us well okay i'm going to go on a bit of around here and stick my hand up because i'm going to register some bias here i'm rooting for solana having worked for a layer one myself i do understand how hard it is to build and sustain a network of decentralized nodes while constantly under attack both from outside and from inside it's not just maxis or other projects it's token holders as well who can be terrifying in their swiftness to judge and condemn now i've always enjoyed my interactions with the team at solana but you should judge the project by whichever criteria best suits you and i guess i'm just rooting for any project that adds value to the space wherever they are whatever they're building now at the weekend i declared myself hard-wired to be anti-maximalist on twitter which prompted david hoffman of bankless to respond like this hardwired to be anti-maximalist is similar to saying i'm chained agnostic which is similar to saying i'm values agnostic it's not a choice you can responsibly opt out of in my opinion which got me thinking you see i find maximalism a troubling position to take for a few reasons i find it tends to promote naval gazing leading to the assumption that innovation is only valid if it comes from within and it also tends to instill a mentality that the answer to all answers has been found or in other words one ring to rule them all and this can quickly lead to xenophobia refusing to countenance the existence of others or worse attacking them here i will plant my flag put down roots and make my home and that just feels like a very defensive position to be taking when everything is moving forward so fast digging in is acting against innovation just my opinion now in his tweet david equated being anti-maximalist with being chain agnostic it's not a choice you can responsibly opt out of but i kind of feel he's missing the point here for me being anti-maximalist means opting into all choices without prejudice now modern society is becoming defined more and more by fluidity of gender of identity nationality politics everything really who i am in the morning may well bear little resemblance to who i am in the afternoon the great qualitative marketer wendy gordon used to call this fractal consumerism now at its worst maximalism is a form of censorship just look at reddit if there's one thing we can hope to gain from crypto it's freedom of choice to go wherever suits is best liquidity dominates the conversation in d5 liquidity is naturally fluid and money will go wherever it damn pleases now i cannot speak for you but if there's one thing i've learned the last few years it's that my own biases my own prejudices invariably get in the way maximalism imposes filter bubbles and rejects opposing opinions by shouting them down now i think we owe it to ourselves to challenge our own assumptions on a daily basis and in response to david if i feel any responsibility it's certainly not to you it's to stand behind the preservation of critical thinking and to be open to great ideas wherever they may be from my point of view solana are building an impressive body of work in this space what sets them apart from me is their resolution to do it their own way they're plugging in the best talent available and the market is clearly responding personally i can't wait to see where they go next because this is not a zero-sum game if they win we all win and that's an idea that seems to be baked beautifully into their entire d5 ecosystem staring brightly at the sun with the most non-judgmental shades i could find this was the defiant you

Channel: The Defiant

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Keywords: blockchain, technology, decentralized, sharding, crypto, cryptocurrency, scalability, proofofstake, defi, decentralized finance, economy, bitcoin, ethereum, one, money, blockchain technology, blockchain explained, what is blockchain, blockchain tutorial for beginners, peer to peer, daps, dapps, btc, coding, cryptography, proofofwork, pow, pos, trade coin, valuecreation, cryptocurrency news, crypto news, cryptocurrency explained, new technology, finance, banks, fintech, uniswap, amm, v3

Id: jcVek9OnVjw

Length: 32min 0sec (1920 seconds)

Published: Fri Apr 30 2021

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