For Solana (SOL), 2022 has been an especially tumultuous year. With revelations of the now defunct crypto exchange FTX’s insolvency in early November, SOL price cratered 55% during the month.
As of press time, SOL was trading at $11.15, down 70% from its November peak of $37.73. Solana last traded at this level in February 2021. Furthermore, SOL price has fallen 94.21% over the past year and is down 95.71% from its all-time high in November 2021, according to CryptoSlate data.
The total value locked (TVL) in Solana decentralized finance (DeFi) fell 63% in a week amid the FTX fiasco. While on Nov. 14 Solana TVL stood at $330 million after losing nearly $500 million in a week, it has fallen further to $214.53 million as of press time, as per DefiLlama data.
Sam Bankman-Fried (SBF), the disgraced former CEO of FTX, who is currently out on bail awaiting criminal trial for fraud, was an early backer of Solana. SBF-owned hedge-fund Alameda Research owned 53 million SOL tokens, as of late August, according to a Forbes report.
The decline of Solana was fuelled by speculations around Binance’s consideration of buying out FTX. Market analysts predicted that in the event of a takeover, Binance would prioritize its own Binance Smart Chain and BNB (BNB) token over Solana, leading investors to a selling frenzy. Binance, however, eventually walked away from the deal, leading to FTX and Alameda’s bankruptcy declaration on Nov. 11.
In June, a class action lawsuit was launched against the Solana Foundation, Solana Labs, Multicoin Capital, FalconX, and Solana co-founder Anatoly Yakovenko. The lawsuit claimed that Solana was centralized and that the defendants profited from the sale of an unregistered security and made misleading claims.
As the network attempts to recover, Yakovenko recently laid down what the network is doing to fix things and its key focus areas in 2023.
Solana’s ongoing focus
Fixing network outages
Long before the FTX debacle, Solana suffered its own problems of chronic network outages in early 2022. While the frequency of outages reduced in the following months, it continued to affect investors. On Jan. 21, the Solana network faced an outage that lasted more than 24 hours, coinciding with a market downturn. This led to the liquidation of several traders’ positions.
According to the Solana uptime tracker, Solana faced 14 outages in 2022 leading to a total downtime of 4 days 12 hours 21 minutes. However, it is to be noted that the tracker has not recorded the outage acknowledged by the network’s official Twitter account on Nov. 9.
The network outages and slowdowns mostly occurred due to congestion, although Yakovenko said that a series of bugs were also to blame for the outages in early 2022. While some of the bugs were new, others emerged as a result of increasing network usage, Yakovenko said.
Therefore, fixing network outages and increasing reliability and resiliency have been a core focus of the Solana engineering team in 2022. At Solana’s yearly conference, Breakpoint 2022, Yakovenko said:
“I would say this whole last year has been all about reliability for the Solana engineering team. And a lot of that, I think we’ve solved.”
In August, Solana announced that Jump Crypto, a part of the quantitative trading firm Jump Trading Group, would build a new validator client for Solana. The validator project called Firedancer would propose significant network upgrades and increase Solana’s efficiency, resiliency, and throughput, Solana claimed.
According to Solana, Firedancer is capable of processing 600,000 transactions per second (TPS) in a test environment, compared to the network’s current average of 4,000 TPS.
Additionally, Solana has redeployed its User Datagram Protocol (UDP)-based system to process transactions on top of QUIC, a protocol developed by Google. QUIC enables fast asynchronous communication, increasing Solana’s resiliency.
Furthermore, Solana has deployed stake-weighted QoS, which “prevents unstaked nodes or low-stake nodes from spamming everyone else,” Yakovenko said. Solana has also developed local fee markets that allow users to pay extra in lieu of having their transactions prioritized for confirmation, boosting network reliability.
Solana’s engineering team has developed some turbine optimizations that are working behind the scenes to amplify instantaneous information transmission capability. Additionally, Solana is also working on runtime optimizations. This included the upgrade of Solana’s Sealevel runtime, which has already increased transaction throughput, Yakovenko said.
He added that Solana engineers are continuing to work on two difficult challenges – the transaction scheduler, and then playing those transactions back. Yakovenko noted:
“The solutions are getting better and better, and heuristics are getting much closer to the best possible you can have.”
In early August, a hacker drained an estimated $8 million worth of SOL and USDC from around 7,767 hot wallets. The attack impacted web and mobile-based Solana wallets, including Solflare, Phantom, Slope, and Trust Wallet. Some Ethereum (ETH) investors were also said to be impacted by the attack.
While improving the security of the network is paramount to the safety of user funds, Yakovenko said that it is also crucial for mainstream adoption. According to Yakovenko, the increasing number of Solana validators has made the network more secure and censorship-resistant. Solana validators totaled 1,911 over the past 24 hours, though 30 validators control over 33% of the total stake.
Yakovenko noted that mainstream adoption of Solana would require far more improvements to security. This could mean deploying automatic audits as a security feature that could help developers catch smart contracts and development loopholes and errors. He added:
“As much automation as we can build, the more robust that these systems can get.”
Making Solana more programmable means using tools like compilers that support a large number of developer languages, Yakovenko said. Solana already has a Solidity compiler called solang. Additionally, Solana’s development framework, Anchor, has become easier to use for developers, he added.
With these additions and upgrades, Yakovenko noted that:
“We went from chewing glass last year to surfing glass.”
The newly released Seahorse program enables developers to write Anchor programs using Python, further increasing Solana’s programmability.
Increasing mobile compatibility
According to Yakovenko, crypto is mainly desktop-based because Web 3.0 business models are not compatible with those of big app stores. However, making cryptocurrencies accessible through mobile applications is crucial for widespread adoption. This is because around 82% of the global population or approximately 6.6 billion smartphones, according to Statista data.
Yakovenko said that app stores are not friendly to crypto decentralized applications (dApps). And dApps that are approved by app stores have to add extra steps for the users to connect their wallets. He added:
“It’s a big challenge, not for the network, but for the user experience, and for developers.”
The Solana Mobile Stack developed by Solana Mobile aims to tackle these challenges. The seed vault, for instance, uses the phone’s in-built security element to store seed phrases, making it inaccessible by Android and enabling dApps to easily connect with wallets, Yakovenko said.
Moreover, the Solana dApp Store, which will start accepting applications in January, will be a permissionless marketplace for mobile dApps, Yakovenko noted.
Solana’s 2023 focus
Solving key programmability challenges
Solana is looking to launch Token-22, a new token standard that will enable the development of new applications such as collecting royalties on transfers and ownership as well as confidential payments.
Additionally, the network is looking to make formal verification a reality, for which tools are already in place, Yakovenko said. He added:
“My hope is at next year’s Breakpoint, I’ll be talking about the smart contracts that are open source, have formally verifiable specs, that auditors can look at the spec and tell you where you’re missing an assumption, or an assumption is not possible to prove.”
The network is also looking to enable type-rich bitcode, which could potentially remove the barriers that prevent call functions between Solana programs. This would give Solana full composability like passing messages between different services, Yakovenko said.
One of the key problems Yakovenko wants Solana to solve is network state and dynamic pricing for storage. While Solana has already optimized the network with hardware, further scaling is required for when the number of accounts reaches 5 or 10 billion, Yakovenko said.
He added that the Solana team is yet to figure out how to price storage. He said:
“We don’t know what the value of the next account should be next to the validators, and how to make sure that that storage is used effectively.”
Tackling network-level improvements — ‘Slimming down Solana’
Yakovenko wants to enable light clients, that allow users not running a full validator node to examine a small sample of data. Light clients, which Yakovenko jokingly calls “diet clients,” could help secure the network and validate that the majority of nodes are correct, he said. Because the proofs on Solana are much larger than thin protocol layers, Yakovenko refers to the goal of enabling light clients as “slimming down Solana.”
Additionally, at the network level, Yakovenko also wants to detach the act of block production from that of running a validator node. He said:
“This allows the actual block producers to be a bit stateless and not need the most synchronized state, so they can spend all of their resources on this very gnarly, real-time knapsack problem of creating blocks.”
This could be achieved with the use of bankless leaders and could lead to significant improvement in network reliability and latency, Yakovenko claimed.
In 2023, Yakovenko is also looking to enable APEX, which would separate the task of playing and reviewing blocks from picking forks. This would in turn eliminate the need of dealing with spiking and declining web traffic demands from validators. Yakovenko said:
“Once you pick a fork, you know the execution and you know the result. And if we can accomplish this, that means that you can have actual program execution run a full epoch behind fork choice. That gives you two days worth of transactions to execute at once.”
All three ideas will boost the network’s security and performance, Yakovenko claimed.
Enabling multiple concurrent block production
Enabling concurrent block production is what Yakovenko calls the “mother of all difficult bombs.” For Solana to be able to create a real-time historical record of events around the world, the transmission of information needs to be instantaneous. Moreover, it would help determine who discovered the information first.
Therefore, it is crucial to remove latencies from the network. This could be achieved with multiple concurrent block producers since it would provide multiple places to validate transactions, Yakovenko said. This is, however, different from sharding, which partitions large databases into smaller parts, Yakovenko noted, adding that:
“We still have a single state machine, a single unified worldview of what the state is. We just have multiple ways to encode that history.”
All of the above-mentioned improvements and updates would help make decentralized systems as fast, reliable, and secure as centralized systems, Yakovenko said.