So how did we end up here? Maybe you’re tired of Ethereum’s high gas fees and think it’s creating a barrier to entry that is eerily reminiscent of traditional finance. Maybe you’re one of the many people who have been affected by the low quality of projects on the Binance Smart Chain. Perhaps you’re also wondering what it is exactly that Cardano does? Short answer: nothing.
All those issues aside, we’re here, wondering if Solana is the solution, right?
I would hazard a guess that at this point you’ve probably read dozens of articles all saying the same things: Solana is a proof of stake blockchain, it utilizes proof of history which is derived from a verifiable delay function, it has ultra-low transaction fees, it has a current transaction throughput of 65k transactions per second and a block time of 400ms, both of which scale with Moore’s law of parallelism to achieve at its top end around 700k transactions per second and a block time only limited by our current understanding of the laws of physics.
And that’s just the short list! So instead of kicking a dead horse and giving you the same spiel everyone else has, let’s talk about what it means to develop on Solana, what it means to be a part of the (rapidly growing) Solana community, and how one navigates the ecosystem.
I’ll preface this by saying that I am developing a Dapp on Solana, so I do have skin in this fight but I do not believe in blockchain maximalism. In fact, Substrate is one of my favorite projects! (You might start to see a pattern here: I love Rust.)
Having said that, why do I – and why should you – bet on Solana?
From experience, there are two ways to choose a winner in any tech-race.
The first is that you bet on the most scalable solution, and in the case of blockchain, that is objectively Solana, and quite possibly Substrate.
The second is the community. Sometimes the inferior product wins, purely based on the fact that there is a community around it. There is a certain programming language that is a great example of this (if you know, you know).
Across all blockchains, and amongst the community of builders, for the most part, there is a sense of camaraderie. We are all keen to help each other and see each other succeed.
Where Solana differs is in the community that exists between its respective protocols.
What do I mean by this?
Well, on the Ethereum network the community between protocols is very competitive, and while no doubt competition is good – as it forces innovation – I find that often-times Ethereum (and to a larger extent BSC, itself being a literal fork of Ethereum) is littered with copycat protocols, with very little to differentiate themselves by. These protocols seek to capture some of the market share of their incumbent competitors by capitalizing on the popularity and hype that it enjoys. This creates a marketplace that is extremely difficult for most users to navigate. One just has to look at the top post on r/Defi, titled: “My brain is melting”, to see this in action.
There is just too much noise, too many “smoke and mirrors”, and it is overwhelming.
Contrast this to Solana where protocols are more synergistic; projects that target the same consumer do so in a manner that offers them something different and innovative, often being able to leverage each other to improve their respective protocols.
Let’s take a look at a recent example: Raydium and Serum.
Serum is an automated market maker (AMM) that implements a central limit order book (CLOB) meaning that a user can place limit orders for their trades instead of relying on the current price of an asset in an AMM’s liquidity pool.
To provide liquidity for their CLOB Serum maintained liquidity pools. Raydium is a competing AMM that, among its many features, also uses the liquidity in its liquidity pools to provide Serum’s CLOB with liquidity.
On the surface it looked like Raydium was trying to corner the same market as Serum, however maintaining liquidity pools was never Serum’s goal; Serum wanted to provide a framework for the community to build upon. A good example of this being the partnership with Bonfida, who provide the graphical user interface (GUI) to Serum. Raydium specifically focused on providing AMM through its liquidity pools and was so good at it that Serum stopped maintaining its own liquidity pools, publicly announcing that they were passing the torch to Raydium as Raydium “does it better”.
This speaks volumes to the synergistic nature of Solana and its protocols.
Furthermore, one just has to take a look at the interactions between Solana projects on twitter; more often than not they support each other. No project suffers the delusion that they are The project that every market participant must use, them and only them. Each understands that for an ecosystem to thrive each should do one thing, and should do it well. And where there exist other protocols that users can derive a benefit from, they take steps to support and to help usher them into the ecosystem thus fostering a community not just among the protocols, but one that includes the users as well.
This camaraderie promotes an ecosystem where the end-user isn’t inundated with 100 “same same but different” flavorings of AMM, and consequently eases the onboarding process of new users and in the process reduces the information overload for all users.
Perhaps this is also compounded by the fact that smart contracts on Solana are generally written in Rust – while they can also be written in C, no one does that – a language that is perfect for smart contract development but relatively speaking not an easy language to learn.
Good Rust developers are few and far between; I know a handful of projects that are struggling to find the necessary talent, and as such we reach out to one another to learn and get assistance; again fostering that community of camaraderie. Everyone is more willing to work together and learn from one another.
Furthermore, the steep learning curve associated with not just the Rust language, but of the architecture of Solana itself, has the effect of filtering out poorly programmed or ill-designed protocols.
That isn’t to say that there aren’t any “rugs” on Solana. Solana itself does provide a suite of tools that ease the onboarding of developers onto the ecosystem.
For example, on Ethereum you must write a smart contract to deploy your token, and while this is largely trivial as many templates for this exist, the process is even more trivial on the Solana network as Solana provides the spl-token program which abstracts this away. A simple call to the spl-token program via the command-line interface, or through the JSON RPC API and you have yourself a token.
This leads projects tend to be quite guarded with their Rust code. Consequently, to correctly identify low quality protocols, one must ask themselves whether the project they are seeking to invest in is not just leveraging pre-existing tools of the ecosystem.
The trick is to look for projects that have actual substance, not the impression of substance.
Another caveat to the complexity of the Solana ecosystem, is it that it serves to dissuade the more product focused individual. As previously mentioned, Rust is not an easy language to learn and talented Rust developers are few and far between. As such it is difficult for visionaries to find the talent they need to create their project on the Solana ecosystem, and this state of affairs isn’t one likely to change anytime soon. A consequence of this is teams that do have the technical knowledge required to build a product, but no product-oriented founder. It is not uncommon for teams to replicate protocols on Ethereum and BSC and port it over to Solana without understanding the nuances of how to properly leverage the Solana ecosystem in the context of the protocol they are forking, or even of the financial mechanisms and motivations underpinning the project, and in some rare cases the ideology behind DeFi itself.
And so, a discerning investor can identify whether a project is of high-quality and is something that people will seek to utilize, integrate with, and build upon by looking at the team. For DeFi specifically: is there a founder with the necessary experience to interpret and understand the market both from a TradFi and a DeFi perspective? Do they understand their product and what problem it seeks to solve? And do they have a long term vision?
If you find any of these questions difficult to answer about a project, but the project has a lot of hype surrounding it, you may just want to get in for the inevitable pump and dump. This is not financial advice.
In conclusion, come to Solana for the tech, stay for the community, and as always DYOR.
About the author
Andrew Fraser is one of the co-founders of Synchrony and a software architect with over a decade of experience designing software for tier-1 financial institutions with a specialty in fund execution platforms and algorithmic portfolio management solutions.
Synchrony is an index-driven algorithmic asset management solution built on the Solana blockchain.