Why did Visa choose the "rebirth" of Solana?

Written by: Asher Zhang, BitPush

On September 5, Visa announced that it would begin sending USDC to selected merchants through the Solana blockchain as part of a pilot program. On September 14, Visa released a research report stating that while testing the stablecoin settlement feature on Solana, it planned to evaluate whether Solana could meet the needs of modern corporate financial operations. On September 1, 2023, MakerDao founder Rune stated that after comparing various public chains, Solana was the most suitable as the new chain for NewChain. Why are Visa and MakerDao both choosing Solana? What are the characteristics of Solana's technology itself?

Why is Solana Popular?

Why did Visa choose Solana as its underlying payment public chain? In the research report released on September 14, Visa explained: "Solana's unique technological advantages include high throughput from parallel processing, low costs from a localized fee market, and high resilience from a large number of nodes and multi-node clients, collectively creating a scalable blockchain platform with an appealing payment value proposition. These are part of the reasons why Visa decided to expand the pilot scope of stablecoin settlements to include transactions on the Solana network."

Why does MakerDao consider Solana to be the most suitable public chain? On September 1, MakerDao founder Rune posted on the forum stating that Cosmos is not built with efficiency at its core like Solana, which means that the costs of maintaining and sustaining performance will be higher; as for public chains like Aptos and Sui, they are simply not suitable. Rune mainly presented three reasons for choosing Solana: first, the technical quality of the Solana codebase is excellent and aligns well with NewChain's goals in addressing Maker's technical debt; second, Solana already has two clients, which is crucial for resilience, and the Solana ecosystem survived the FTX collapse, proving the public chain's robustness; third, there are already examples of the Solana codebase being forked and adjusted into application chains, which will help MakerDao build its own application chain in the future.

Overall, the reasons for Visa and MakerDao's choice of Solana primarily revolve around Solana's technological advantages. These advantages are mainly reflected in high throughput, low costs, and high scalability. So what makes Solana's technology different? The following will further explore the technological principles and advantages behind Solana.

The Technological Principles and Advantages Behind Solana

The main feature of Solana's blockchain technology innovation is the introduction of a completely new consensus mechanism, realized through the Proof of History (PoH) algorithm and a fast synchronization engine. Unlike traditional consensus algorithms that rely solely on cryptographic techniques, PoH uses a decentralized clock to establish the order of transactions and events on the Solana network. By efficiently tracking the order of these transactions, it enhances the overall efficiency of the network, which differs from other blockchains that may have ambiguous transaction ordering.

Specifically, the PoH algorithm generates a series of verifiable timestamps, which are stored in the blockchain ledger. Each timestamp contains the hash of the previous timestamp, creating a verifiable chain of events. This mechanism allows nodes in the network to reach consensus on the order of operations. PoH is not just a theoretical concept; it is also a timing system used to verify the order and passage of time between events.

The Proof of History (PoH) algorithm of Solana has the following advantages: 1) Scalability: PoH allows for parallel processing of transactions, creating a reliable and verifiable sequence of events, enabling Solana to achieve high transaction volumes; 2) Speed: Solana eliminates time-consuming operations by using a decentralized clock and historical timestamps, resulting in low latency and allowing for near real-time transaction confirmations;

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

How Solana Builds a Positive Development Ecosystem

The reason Solana was able to rise from the ashes after the FTX collapse and has become increasingly popular in the public chain competition is not only due to the superiority of its underlying public chain technology but also because of its high-quality development ecosystem, which seems to be rooted in Solana's genes from the very beginning and has continuously developed, forming a positive cycle.

The core team of Solana has backgrounds in high-tech companies like Qualcomm and Google, which ensures high quality in Solana's underlying code and a rapid development pace for the project. Compared to the technological development progress of Ethereum, Solana's launch speed has been very fast, and it has already been listed on multiple centralized exchanges.

After practical application, Solana's technology, supported by SBF, saw its market value soar, establishing an important position in the crypto market. In 2020, SBF, the founder of FTX, had a significant influence in the crypto market. He rapidly increased Solana's market value by actively promoting it and taking a series of measures, such as accumulating tokens and driving prices up, attracting a large number of users to participate. According to Coinmarketcap data, in October 2020, the lowest price of SOL was $0.31, while it reached $259.69 in November 2021, an astonishing increase within a year.

After attracting widespread market attention, SBF further incubated a series of Solana ecosystem projects, building a foundational application ecosystem for Solana. These projects include the decentralized order book matching engine Serum, the first automated market-making decentralized exchange Raydium, the first lending protocol Oxygen, and the custody bridge Sollet, among others. Additionally, stablecoins USDC and USDT have also been integrated into Solana.

Leveraging its Silicon Valley background, Solana is committed to establishing a high-quality developer ecosystem, attracting core developers from large tech companies. Solana mainly cultivates the developer community by recruiting core developers in the tech field and hosting hackathon events. These activities include short-term pop-up events with investors and founders from around the world serving as judges, known as the "Hacker House Series."

The high-quality developer ecosystem has further driven the emergence of some star projects on Solana. For example, the team behind the Ethereum star project Ox, Phantom, developed an excellent wallet on Solana. Additionally, the emergence of the NFT project Magic Eden has established Solana's own NFT community. The core team of Magic Eden also has a background in Silicon Valley and Google. From the launch of the Solana market to the NFT market capturing a 90% market share, it took less than two months. Subsequently, the fitness app STEPN also launched on Solana, attracting a large number of new users. Among STEPN's 5 million registered users, about one-third are entirely new users from outside the crypto circle.

Conclusion

Although Solana has experienced issues related to the FTX collapse, it has currently emerged from the shadows based on the data, which is fundamentally attributed to Solana's outstanding underlying technology. In addition, Solana has built an excellent development ecosystem, leading to an influx of users and a thriving ecosystem. However, Solana's previous downtime issues have drawn criticism from the market, and it will still require time for further verification in the future.