Why did Visa choose Solana, which has been "reborn from the ashes"?

Visa said on September 5 that it will begin sending USDC to selected merchants through the Solana blockchain in a pilot project. On September 14, Visa released a research report saying that when Visa tries the stablecoin settlement function on Solana , it plans to test whether Solana is capable of meeting the needs of modern corporate financial operations. On September 1, 2023, Rune, the founder of MakerDao, compared many public chains and believed that Solana was the most suitable new chain for NewChain. Why did Visa and MakerDao choose Solana? What are the characteristics of Solana technology itself?

Why is Solana popular?

Why did Visa choose Solana as the underlying payment public chain? Visa explained in a research report released on September 14: "Solana's unique technical advantages include high throughput of parallel processing, low cost of localized fee markets, and high elasticity of a large number of nodes and multi-node clients, which together create a scalable blockchain platform with a compelling payment value proposition. These are part of the reasons why Visa decided to expand the scope of the stablecoin settlement pilot to include transactions on the Solana network."

Why does MakerDao think Solana is the most suitable public chain? On September 1, Rune, the founder of MakerDao, posted on the forum: Cosmos is not built with efficiency as the core like Solana, which means that the cost of maintaining and maintaining performance will be higher; and as for public chains such as Aptos and Sui, they are not suitable at all. Rune mainly proposed three reasons for choosing Solana: First, the technical quality of the Solana code base is very good, which is very consistent with NewChain's own goal of solving Maker's technical debt; second, Solana already has two clients, which is crucial for elasticity. In addition, the Solana ecosystem has survived the FTX crash, proving the resilience of the public chain; third, there are already examples of the Solana code base being forked and adjusted to an application chain, which will help MakerDao build its own application chain in the future.

Overall, Visa and MakerDao chose Solana mainly because of Solana’s technical advantages. This technical advantage is mainly reflected in high throughput, low cost, high scalability, etc. So what is the difference in Solana’s technology? The following will further explore the technical principles and advantages behind Solana.

The technical principles and advantages behind Solana

Solana's main feature in blockchain technology innovation is the introduction of a new consensus mechanism based on the Proof of History (PoH) algorithm and a fast synchronization engine. Unlike traditional consensus algorithms that rely solely on cryptographic technology, PoH uses decentralized clocks to establish the order of transactions and events on the Solana network. By efficiently tracking the order of these transactions, it improves the overall efficiency of the network, unlike other blockchains where there may be ambiguity in the order of transactions.

Specifically, the PoH algorithm generates a series of verifiable timestamps that are stored in the blockchain ledger. Each timestamp contains the hash value of the previous timestamp and creates a chain of events that can be effectively verified. This mechanism allows nodes in the network to reach a consensus on the order of operations. PoH is not just a theoretical concept, it is also a timing system for verifying the order and passage of time between events.

Solana’s Proof of History (PoH) algorithm has the following advantages: 1) Scalability: PoH allows transactions to be processed in parallel, creating a reliable and verifiable sequence of events, enabling Solana to achieve high transaction volumes; 2) Speed: Solana eliminates time-consuming operations by using decentralized clocks and historical timestamps, and has low latency characteristics, allowing transactions to be confirmed in almost real time;

3) Security: PoH ensures that the order of events in the blockchain network is verifiable, which makes it more difficult for attackers to manipulate the order of transactions or conduct double-spending attacks, thereby improving the overall security of the network; 4) Efficiency: The parallel processing of transactions and the high throughput achieved by Solana help improve transaction efficiency and reduce marginal costs.

How Solana builds a healthy development ecosystem

The reason why Solana was able to be reborn after the FTX collapse and became increasingly popular in the public chain competition is not only related to the superiority of the underlying public chain technology, but also to its own very high-quality development ecosystem, which seems to have been rooted in Solana's genes from the beginning and continues to develop, forming a virtuous circle.

Solana's core team has backgrounds in high-tech companies such as Qualcomm and Google, which makes Solana's underlying code of high quality and the project development speed very fast. Compared with the technical development progress of Ethereum, Solana's launch speed is very fast and has been logged in to many centralized trading platforms.

After Solana's technology was put into practical use, with the support of SBF, its market value soared rapidly, making it an important position in the crypto market. In 2020, SBF, the founder of FTX, had a great influence in the crypto market. He quickly increased Solana's market value and attracted a large number of users to participate by actively promoting Solana and taking a series of measures such as hoarding coins and pulling the market. According to data from Coinmarketcap, the lowest price of SOL was US$0.31 in October 2020, and it reached US$259.69 in November 2021, an amazing increase in one year.

After attracting widespread market attention, SBF further incubated a series of Solana ecological projects and built a basic application ecosystem for Solana. These projects include the decentralized order book matching engine Serum, the first automated market-making decentralized trading platform Raydium, the first lending agreement Oxygen, and the custodial bridge Sollet. In addition, stablecoins USDC and USDT have also been integrated into Solana.

Solana relies on its Silicon Valley background to build a high-quality developer ecosystem, attracting core developers from large technology companies. Solana mainly cultivates the developer community by recruiting core developers in the technology field and hosting events such as hackathons. These events include short-term flash events with investors and founders from all over the world as judges, called the "Hacker House Series."

The high-quality development ecosystem has further promoted the emergence of some star projects on Solana. For example, Phantom, the team behind Ethereum's star project Ox, has developed an excellent wallet on Solana. In addition, the emergence of the NFT project Magic Eden has enabled Solana to have its own NFT community. The core team of Magic Eden also has a background in Silicon Valley Google. It took less than two months from the launch of the Solana market to the market share of the NFT market reaching 90%. Subsequently, the fitness app STEPN also launched on Solana, attracting a large number of new users to Solana. Among STEPM's 5 million registered users, about one-third are brand new non-crypto users.

Summarize

Although Solana experienced the FTX crash, the data shows that it has emerged from the shadows, which is essentially due to Solana's excellent underlying technology. In addition, Solana has built an excellent development ecosystem, which has attracted an influx of users. Thus, the ecosystem has prospered. However, Solana's previous downtime problem has also been criticized by the market, and it will still take time for further testing in the future.