Is This The Next Ethereum? - YouTube

Hello and good morning to you and my new haircut!

Now I know you saw the title of the video and you’re thinking

We just learnt about Ethereum.

What’s this next ethereum!

I mean it's true!

There are many blockchains that are claiming to be ethereum killers.

And it's a fairly long list - there's Cardano, Polka Dot, Cosmos, Tron

And we’ll talk about all of them slowly slowly

Because I personally feel like we will end up living in a multi chain world in the future.

But today I want to talk about one particular “ethereum killer” project called Solana.

And here’s why Solana has my attention.

For starters, it is backed by the founders of an immensely popular crypto exchange

Called FTX.

And one of the founders of FTX is Sam Bankman.

He’s one of the world’s youngest crypto billionaires

And of the 100’s of projects they reviewed, they picked to back Solana because of how

fast it is.

But more recently, Solana’s been in the news because it raised something called Pi

million dollars, that is, 314 million dollars.

And one of the leading firms in the fundraise was A16z.

One of the world’s most popular venture capital firms.

As an Indian, Solan has my attention because one of the founders of Solana is a man named

[drum roll] Raj Gokal.

A desi techie making waves internationally.

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So please drop a like and leave a comment saying “for the algorithm.”

But jokes aside, I recently also found out that Solana recently concluded a global hackathon

Inviting teams forms around the world to participate.

And over 50 teams that participated were from India.

And for good reason because one of their prizes was reserved for a regional track

that includes India with a prize pool of 50,000 dollars

Supported by Devfolio and CoinDCX.

This Hackathon has now concluded However, if you are an indian developer watch

this video till the end Because there’s some really really cool

opportunities to build your own protocol or Dapp on Solana, and I will talk about them

at the very end.

So all these reasons and the India connect, I thought I’d do a video on Solana.

And why it’s worth watching out for.

So let’s just jump in.

Alright - so many folks think the tech behind Solana is an Ethereum Killer

Even though personally I don’t think ethereum is going to die

However, Solana’s tech is definitely worth having a look at.

Like let’s compare some stats.

First let's look at transactions per second - aka TPS.

While Ethereim can do 15 transactions per second

It’s competitors like Polkadot or Tron can do 1000 transactions per second.

That’s a pretty decent competition…

But Solana can do 65,000 transactions per second.

If you thought that sounds impressive, let’s look at the average transaction fee.

So we already know Ethereum gas fees are a bit of a problem

Sometimes the fees are as high as 15 to 30 dollars for one transaction.

Meanwhile its competitors like Polkadot take around 1 dollar.

But Solana transaction fees are as low as 0.0015 dollars!

I know.

That sounds almost too good to be true.

Usually with such scale and low fees, there has to be some trade off, right?

But Solana claims to be the most performant permissionless blockchain in the world.

And it’s managed to achieve this through several new technologies

which are considered a breakthrough in blockchain tech

And blockchain tech as we know, is considered to be a breakthrough in internet tech

And internet tech as we know is considered to be a breakthrough in computer tech

And computer tech as you, well… you got the picture.

Previously in our Ethereum video, which you can check out here

By pressing the i button on the top right we saw that Ethereum developers are in the

know that they’re a little slow and a little expensive.

And they’re solving that through sharding, proof of stake, layer two solutions.

But Solana uses a completely different technology called proof of history!

And the team that has built it includes former employees from Google, Apple, Microsoft, Intel,

you name it!

So let’s try and understand what is the tech behind Solana.

But in order to do so, we have to understand something called The Blockchain Scalability

Trilemma.

Also known as the blockchain trilemma.

Ethereum co-founder Vitalik Buterin had coined the term blockchain trilemma.

The idea is that there are three desirable qualities of any blockchain-

decentralization, security and scalability.

But the trilemma claims that only two of these qualities can be maximised,

and usually it’s at the expense of the third!

What this means is you could have extremely high security, be decentralized

However you would have to compromise on scalability.

Or you could have high scalability and high security

But you will be compromising on being decentralized.

So all blockchain systems have to make some sort of trade-off

Which depends on the application and use of the blockchain.

But Solana claims that it has actually solved the blockchain trilemma!

It is highly decentralized, it’s very secure and it’s very scalable.

So how does it achieve this insanity?

The secret lies in a whole new mechanism called Proof of History -

But before we get into proof of history, let's do a quick revision of proof of work and proof

of stake.

First - there was Proof of work.

In proof of work, many different computers from around the world

They fight in order to be able to compute the next hash

The more powerful your computers, the more your chance of beating all the other computers.

So you can get a chance to compute the hash.

Now because of this mechanism, proof of work blockchains have very low transactions per

second.

And a higher time to add new blocks.

Like bitcoin takes 10 minutes to add a new block full of new transactions

While ethereum takes about 15 seconds.

That means no matter how fast your transaction gets added to the block

It will at least take 15 seconds for that to reflect.

This might still make sense for transactions After all, bank transactions can also take

this long.

But it makes no sense when it comes to building dapps.

Imagine clicking the post button on Instagram And it takes at least 15 seconds for it to

post.

Now multiply this experience into 10 times a day for millions of users.

So people eventually realised that proof of work blockchains is not good enough

To build web 3.0.

So soon came a new concept came, called Proof of Stake.

In proof of stake, instead of all the computers fighting against each other

there’s a lucky draw.

Any one computer can be chosen to validate the transaction like a lucky draw.

And this depends on the amount of ether that they have staked.

What this will do is increase the number of transactions per second significantly.

Like ethereum is expected to go from 15 transaction a second to 100,000 transactions a second.

But here’s the catch.

Ethereum’s block time, that is the amount of time taken to add a new block

Goes from 15 seconds to only 12 seconds.

In fact the other proof of stake chains like Cardano or Polkadot

They also roughly have the same time.

So proof of stake is reducing the transactions per second,

But block time isn’t changing much.

And there’s a very fundamental reason behind it.

And the reason is called time keeping.

Imagine me, Naveed and Raghav.

I’m here on my PC.

Naveed is sitting on the table in front of me.

And Raghav is on the sofa on the other side.

Now imagine we are the nodes of this network.

So Naveed is closer to me than he is to Raghav.

Now imagine Naveed does the following four things.

He took a spoon of Tang.

He added it to a glass of water.

He stirred it.

And then he drank it.

As soon as he mixes Tang into the water, Shankar brings a message in an envelope to me and

Raghav.

So we can sign it saying, yes, we agree that this has happened.

The message that Naveed mixed Tang in water needs to reach almost all nodes.

Once majority consensus has been achieved, only then can the network proceed.

Because I am closer, I will see all of it happen faster than Raghav will.

In this case, this difference will be less than nanoseconds.

But if this distance is in kilometers, this time can increase.

I might think Naveed drank the Tang at 10:01 am

While Raghav could believe it’s at 10:02 am.

Now this difference of 1 minute is also a lot when we are trying to build a decentralized

exchange.

When we trade in the stock market, we are trading in a centralized exchange.

And they do their own time keeping so we all accept it.

However, on a decentralized exchange, things are a little different.

And decentralized tech still hasn’t achieved efficient timekeeping.

Which is why even in proof of stake you can’t get faster than this.

Now, how do we fix it?

This problem is solved by a tech that Solana is using

Called Proof-of-history What is proof of history?

Decentralized world works because we eliminate the need to trust any party using cryptography.

This same idea can be applied to timekeeping too.

Using cryptography, we can create a proof of passage of time.

Aka, A proof of history.

To understand how that works, imagine I show you these five photos.

In one, water has Tang has started to dissolve in water.

In one, Naveed has finished half a glass of it.

In one, Tang has dissolved half-way.

In one, Tang is now fully dissolved.

And in one, Naveed has a spoon of Tang and a clear glass of water in his hands.

You can just look at all the five photos and tell which was clicked before which other

photo.

By simply using the logic of entropy, we can arrange all five photos in a sequence.

Now imagine if there was a rule that a photo would be clicked evey five seconds for every

activity that Naveed performs.

Suddenly we also have a precise idea of time.

So if I make it compulsory to attach the latest photo to every block, we know that every block

was created in an interval of five seconds.

Suddenly every block has a kind of inbuilt clock.

This is exactly what proof of history does cryptographically.

It uses a mathematical function which takes 0.4 seconds to give results.

So we know every block in a proof of history blockchain is 0.4 seconds apart.

This result is added to every block so others can verify if this is correct.

Basically we don’t need Shankar to bring me and Raghav a message that we will then

sign.

We’re just taking a phot of Naveed every 0.4 seconds

And are adding that photo to every new block.

Now of course this is a very very simplified understanding of what proof of history is.

If I got anything wrong, my apologies.

I’m linking a few videos in the description that go into a little bit more depth.

So you guys can go check it out.

Now proof of history is just one of the things that makes Solana different.

It has some other differentiating features as well.

Number one.

Scalability.

Now Solana is very fast.

It’s the fastest blockchain we know.

But in case that wasn’t enough, Solana actually cracked a hack by which they can keep getting

faster without changing much of their architecture.

And they have done it by believing in something called Moore’s law.

Moore’s law basically states that every two years the number of transistors in a circuit

will double.

And Solana is designed to exploit this idea.

Solana parallely runs processes in our GPU cores.

Which means if the number of cores in the GPU keep doubling every year, Solana can keep

getting faster and faster, by not changing anything in their code at all.

Number two.

Speed.

Solana is the only blockchain today that has transactional capacities comparable to the

internet that we know as of today.

0.4 seconds and we’re done.

You really need to see it to believe it.

And you can see it live on Solna block explorer.

On this website you can see the average block time every time a new block is added.

If you scroll down you can even see the current transactions per second.

Number 3.

Validators.

Solana has around 600 validators right now.

Which is very less compared to Ethereum.

There are over 11000 validators on Ethereum.

But of course, Eth has been around for 4 years.

How many more validators join Solana, we’ll have to wait and see.

But unlike ethereum, where you need 32 ether that you need to stake in order to be a validator,

on Solana there’s no set number as such.

Any member can be a validator.

Number four.

Finality time.

One interesting concept is called finality time that we haven’t spoken about yet.

Since technically anyone can change the copy of their blockchain,

We introduced something called proof of work So changing anything in the block becomes

hard and time consuming.

Which means anyone trying to make any change in the block will get caught easily.

But this also means that you have to wait for your block that contains your transaction

to get at a little old, so that newer blocks are added in front of it and changing anything

in your block becomes that much harder.

Finality is nothing but the guarantee that past transactions can not be changed.

On bitcoin, the finality time is around 6 blocks, that means six into bitcoin’s block

time, that is ten minutes, which means roughly about an hour is what you have to wait before

you get the finality time.

Similarly the finality time on ethereum is about two to ten minutes.

The faster you can add new blocks, the quicker your finality time!

Now proof of history makes adding new blocks extremely quick.

The finality time on Solana is very very low.

Alright, now let’s talk about the Solana token which is denoted by SOL.

Like Ethereum has ETH, Solana has SOL.

Now as of recording this video, the circulating supply of solana was about 270 odd million

out of a total supply of 489 million.

Now given that solana is such a quick, fast blockchain to use, naturally many new projects

are being built on top of Solana.

There’s Serum.

Which is one of the first DeFi protocols to be built on top of Solana.

Serum is a decentralized exchange that uses the order book method, something that centralized

exchanges often use.

Now Solana is the only blockchain that is capable currently of holding such an ambitious

project because of the high tps and low block time.

USDC and USDT have also adopted to Solana.

Remember Audius, the audio streaming platform, that was earlier built on Ethereum?

They too have decided to migrate from Ethereum to Solana.

Now they can do that because Solana has released something called an Ethereum bridge that helps

dapps to transition to Solana.

This bridge is why many believe Ethereum and Solana

can coexist.