Subsquid support for Solana is coming soon. But why did we pick this one?
It might be hard to fathom for Ethereum Maxis, yet the Solana ecosystem has shown its resilience and outperformed countless Alt-L1s, all while thoroughly neglecting the notion that the only way to scale is via L2s (many ways lead to scale).
Before diving into why we've decided to enable Solana devs to use Subsquid, here is a brief introduction to Solana more generally.
What is Solana, anyway?
Solana is an open-source blockchain with the goal of syching information at the speed of light. If you had to boil down their thesis on how to achieve that scale, it's simple: "Hardware scales."
Anyone who has lived through the times in which the internet went from something you couldn't use when someone else had a call in the house to being ubiquitous will intuitively have a feel for how this thesis can play out.
The hardware focus is one of the reasons Solana is disliked by the decentralization maxis, who believe that anyone should be able to run a node. They tend to forget that Solana, with its current Nakamoto Coefficient of 22, has a better validator distribution than Ethereum (2), and running a full node on most blockchains is unattainable for an average noob.
Solana optimizes for latency and throughput using a novel timestamp mechanism called Proof of History, a block propagation protocol called Turbine (broadcasting blocks to the rest of the network), and parallel transaction processing to speed up transaction execution. Since its mainnet launch, Solana has gone through countless upgrades and, among other things removed one of its biggest issues in the past: downtimes.
At the time of writing, Solana had its longest streak of uptime, with more than 330 days. That's a testament to work on the core protocol, and compared to the countless L2 sequencers and alt L1s that went down under the load of Ordinals, not a bad track record.
And it's the only blockchain with soon two phones.
Why we're excited about Solana
There are many reasons to look forward to this integration, not least that Solana is still lacking an easy-to-use, blazing-fast web3 decentralized data provider and indexer, and we'd love to see more devs use Subsquid.
But that's beside the point. In the following, we'll outline why we're hyped to become part of the SOL ecosystem.
Like a phoenix, Solana has recovered from its biggest crisis when Alameda turned out to manage their portfolio worse than a stoned teenager handling the BSC Github. Since then, the ecosystem has sustained continuous growth, especially in the last quarter of 2023, with Onchain activity picking up after the JTO airdrop and the BONK listing on Coinbase.
The ecosystems' love for dog memes also gave us Dogwifhat, a memecoin where no one knows why the dog has a hat, but it's cute and now has a marketcap of $430 million.
In the last year, Solana rose from #17 on CoinmarketCap to be part of the top 5 in marketcap. Alongside the market cap grew fee revenue, daily fee payers, and TVL. In the last three months of 2023, users paid 13.7 million for using the network.
Spurred by JTO and Bonk, daily fee payer numbers also jumped from sitting at an average of 80 - 100k to over 450k in December. Safe to say, Solana is on a growth trajectory that doesn't show any signs of slowing down. Solana's daily DEX volume overtaking Ethereum's might be a sign of what's to come. NFA.
The growth in usage metrics has been accompanied by a growth in developers, with Electric Capitals' Developer report counting more than 2500 developers in the ecosystem and a three-month retention rate of over 50%. It helps that Solana now supports 12 programming languages, including Solidity, Python, and C++.
The countless hackathons Solana entities and third parties like Superteam hosted are bearing fruits, with over 3000 projects launched via Hackathons.
And while the growth has been fun to witness, what has enabled all of this to happen is naturally the underlying tech. We're in it for the tech, after all.
This is by no means a complete overview of the Solana tech, just a few highlights that get us going in the morning when it's time to build this integration.
Token extensions are a new SPL token standard that enables token issuers to add a set of configurable features to tokens. They've been developed based on feedback from the Solana Foundations' discussions with institutions and enterprises, but they're not just for the suits.
So, what do extensions do? Here are a few examples:
- Confidential transfers generated quite a buzz when they were announced; no wonder privacy remains a big challenge in crypto. While this extension doesn't fully conceal the entire transaction record, it does allow hiding the amount of transactions from everyone.
- Transfer fees allow developers to add more programmable logic to tokens, which is great for memecoins that establish a "tax" on transfers. Bonk, for example, is using the extension to ensure that 6.9% of transfers go to its treasury, potentially to finance hat purchases. More compliance-minded organizations can also use this extension to add further conditions to transfers, such as KYC or OFAC compliance.
- Permanent delegate is best thought of as a solution for managing RWAs as it grants the issuer complete authority over the asset.
Others include interest-bearing and non-transferable. You can read an overview of all the extensions here.
While other chains have protocols offering the above functionalities, the benefits of taking the extension approach include composability and interoperability with the rest of the network, as leading infrastructure and wallet providers already support the token standard.
Local Fee Markets
One of the greatest annoyances of any trader about to get liquidated on a loan because their health score dropped is having to pay high fees just because simultaneously there is a hyped mint going on. Irl gas doesn't get more expensive just because one gas station has a long queue.
Solana is aiming to solve that problem with local fee markets where the fee increase in one area does not translate to an overall increase in network fees for everyone. The hyped mint, for example, would just mean there is a fee increase for that activity but not for the trader topping up their collateral.
This works because of limits on compute units per block, which prevents single programs from using up all the available block space. In the mint example, the mint would hit the limit for the accounts associated, and they'd have to pay up.
Observations from fee development in 2023 suggest that local fee markets are working to prevent global fee spikes.
NFTs aren't dead. They're just compressed. Compression in the context of Solana cNFTs differs from traditional file compression, which relies on algorithms to reduce file size (and often quality). Instead, these NFTs use state compression and Merkle trees to condense the data associated with NFTs into a hash, which is then stored on the blockchain.
Without going in-depth on the use of concurrent Merkle trees in the process, the best part about compressing NFTs is that you can now issue a million of them for less than $200. Creating, distributing, and managing cNFTs is possible at a previously unimaginable scale, opening the door for big enterprise use cases and consumer applications where end-users range in millions and don't want to pay fees.
Currently, Solana is only supported by two clients: one built by Solana Labs and an MEV-optimized fork of that developed by Jito. Needless to say, that isn't a sufficiently diverse set, but things are looking up for 2024 with two new clients scheduled to launch.
Firedancer has been making the rounds on Solana Twitter with posters pointing out that it'll melt faces. Developed by Jump Crypto, this client is already live in a test environment and has sustained over 1 million TPS (compared to Labs' current client with 55k TPS). While the impact of its full launch is still a topic of heated debate, overall, it is a positive development for the ecosystem.
In addition to that, Syndica is building a validator client focused on optimizing RPC reads to decrease latency and make user requests flow more fluidly between validators and end-users. Ultimately, their goal is to make developers' lives easier.
And it's not just validator clients being built either. In line with the spirit of trustless verification, Tinydancer is developing the first light client for the Solana network. Light clients allow users to verify transactions without downloading and processing whole blocks. Tinydancer will further bolster security and trust within the system by giving anyone the ability to check for themselves if a transaction is valid or not.
Focus on resolving current bottlenecks
It's worth noting that despite its longest uptime streak and continuous development on increasing scalability, Solana isn't perfect. Yet, they are aware and working on resolving current bottlenecks.
On the agenda to fix are inefficient resource pricing and allocation and addressing the current incentive to spam the network.
Spam has been an ongoing issue for Solana, mostly because of how blocks are built. Due to parallel threads, there is no one queue that orders transactions globally. Consequently, priority fees as used in other chains, aren't as effective for ordering, and transactions end up being included on a First in First Out basis (FIFO), which invites spamming.
Scheduler Upgrade V1.18 and other economic upgrades are expected to help fix this.
On top of that, Solana Founder Anatoly has recently shared a few more thoughts on Solana 2.0, among them the introduction of async execution, which streamlines transaction processing by decoupling it from consensus. Potentially making Solana even faster and more reliable. For a deep dive, check out this write-up.
Most of the current web2 runs asynchronously, and as he put it, "Asynchronous execution is one of the rare cases where there are virtually no trade-offs."
Home to DePIN
All of this amazing tech needs to be good for something, right? In the end, blockchains are nothing but an Operating System for others to build on, and Solana has become home to a new thriving sector of the industry: DePIN, thanks to state compression and fast block times.
Decentralized physical infrastructure is the label for networks that use tokens to incentivize communities to maintain physical infrastructure networks such as mobility, EV charging, and computing power.
One of the earliest successful DePIN networks was Helium, which built a native protocol around its physical hotspots that users could run to provide LoRaWAN coverage (basically internet). After building up their network to cover 170 countries and nearly 1 million hotspot operators, the team decided to transition entirely to Solana, and has since been running smoothly and at a significantly lower cost.
If you're in the US, you can even get a mobile data plan for just $20 covered by Helium now. Talk about real-world use cases.
Another project powered by Solana in the same realm is Hivemapper, a project that maps the world in near-real time by incentivizing drivers to run their cameras while cruising around. Their map data is more accurate than Google Maps and already powers a variety of businesses.
Render, a decentralized GPU rendering network, also has migrated to Solana in the past year to enhance its performance. Slowly but surely, Solana is becoming a bit of a DePIN hub.
And let's not forget they launched their own phone, which also counts as physical infrastructure.
And other thriving dApps
If we were to cover all the successful dApps on Solana, this post would be getting pretty long. So, just a few more highlights that even non-Solana users might be familiar with:
- Pyth Network is quietly shaping up to become a solid competitor to Chainlink by offering real-time pricing faster and cheaper, powered by Solana's Permissioned Environments.
- Drip has really embraced the cNFTS and issued more than 35 million NFTS in collaboration with artists offering free mints to users.
- Solana Pay has been integrated with Shopify, giving merchants access to accepting Solana-based assets for payments easily.
- Phantom Wallet is what MetaMask could have been had they focused more on the user experience. Starting as a Solana wallet, Phantom has since expanded to cover multiple chains, including Ethereum, and now has more than 2.7 million users.
You can find many more in this Solana ecosystem map.
Anatoly Yakovenko built his career in telecoms, working as a senior engineer at Qualcomm and creating distributed systems at Dropbox before he started Solana. He's a self-described nerd talking technical gibberish who always seems open for constructive feedback and isn't afraid to admit when things went wrong (See him speak on the Saga before BONK went up on Laura Shin's Podcast).
Anatoly isn't one to shy away from sharing his opinions, even if they're contested, and his sense of humor shines through on his socials, especially when it comes to all things Sol's phone.
While everyone was totally in on the L2 narrative and that rollups are the way to scale, he held his ground, pointing out, rightfully so, that this fragmentation isn't useful for building consumer apps because "Tracking consistency between two different databases is a major pain in the ass. You would have to synchronize everything through the [layer-1].”
Since this message didn't land, he went a little further and started trolling the Ethereum crowd with his take that "Solana is an Ethereum L2 through Wormhole". Even renowned media publications like Cryptoslate fell for it. Kudos.
Anyway, the point is based founders do better. He's one of them, as evidence suggests.
We're thrilled to make Solana data available soon in our data lake and empower builders to develop even faster. Solana has shown resilience throughout tough times and has come back stronger. It features solid tech, a thesis that anyone can relate to, products already used by non-web3 companies & users, and a based founder.
What's not to love?
Article by @Naomi_fromhh