The Origins of Solana: How to Turn Thoughts into Reality?

Author: Jeff February, Blockworks; Translated by: Wuzhu, Golden Finance

Every great innovation begins with a problem. For Solana, this problem is obvious. Blockchain is too slow, too expensive to be adopted by mainstream. Ethereum is facing congestion, Bitcoin is too rigid for complex applications, and no one else has made any meaningful progress in solving scalability issues. This will be a daunting technical challenge for an engineer, prompting him to set out to build his own decentralized network to process transactions at the speed of the internet.

In 2017, experienced Qualcomm engineer Anatoly Yakovenko turned his attention to Web3. He was attracted by its potential to decentralize finance and reshape the Internet. While the technology is promising, blockchain has begun to shrink after nearly a decade of relative victory: it has expanded too slowly. This inefficiency is a fundamental bottleneck. It clearly hinders the massive adoption of real-time gaming, decentralized finance, physical infrastructure networks, artificial intelligence reasoning and autonomous machine coordination.

The problem is that blockchain lacks a built-in clock. Each node in the decentralized system confirms transactions in order, and the entire network needs to be consistent to complete. This process is slow, which makes blockchain unsuitable for high-speed applications. Yakovenko 's breakthrough comes from the introduction of Proof of History (PoH), a conceptual encryption method that timestamps transactions before they enter blocks, creating verifiable sequences of events.

Unlike traditional verification (nodes process transactions in sequence), PoH supports simultaneous processing. This innovation provides rocket fuel for efficiency, freeing up unprecedented throughput and eliminating congestion. Yakovenko formed a team of engineers, including Greg Fitzgerald (also from Qualcomm) and Raj Gokal. They founded Solana Labs in 2018, inspired by the small California waterfront town where Yakovenko often surfed.

In the early stages, Solana Labs started through private funding and raised about $20 million from venture capitalists and early cryptocurrency investors. The team built and tested a prototype network that proved the potential of PoH, with benchmarks showing that it can process over 50,000 transactions per second – several orders of magnitude faster than Ethereum and Bitcoin.

Solana officially launched its mainnet beta in March 2020, when the Covid-19 pandemic caused global markets to become in chaos. Despite the bad timing, the network has attracted the attention of developers and investors due to its commitment to high-speed, low-cost transactions. The ability to process transactions at a fraction of a cent makes it an ideal platform for DeFi applications, gaming platforms and numerous experimental decentralized tools—all of which were subject to Ethereum slow speeds and gas fees before that High limit.

In June 2021, Solana Labs received a $314 million financing led by Andreessen Horowitz (a16z) and Polychain Capital. The legitimacy this runway brings to the ecosystem allows it to expand and innovate quickly. Solana soon became the home of Serum (DEX), Raydium (AMM liquidity provider), Mango Markets (margin trading agreement), etc. At the end of 2021, Solana's price surged to a high of $260 — up from $0.50 18 months ago — cemented its top five cryptocurrency position in the market cap. Investor confidence soared and Solana's momentum seemed unstoppable. By the end of 2021, Solana has evolved from an ambitious experiment to a major force in the crypto space. However, behind its rapid rise lies invisible challenges that will soon test the resilience and stability of the network.

Preview of the next chapter of the Solana series: How the collapse of one of the biggest players in cryptocurrencies has brought shock waves to the Web3 ecosystem and why many people think Solana cannot survive.